A Study On The Impact Of Managerial Power On Executive Compensation Of Chinese State-Owned Listed Companies

Managerial power and executive compensation incentive are always in the center of market’s attention. In Chinese state—owned listed companies, stated-owned equity dominates exclusively and there is always the problem of the absence of the ultimate owner. Most directors of the board are corporate executives, shareholders’ meeting is completely controlled by the executive, also, the executives have "amphibious" identity which cause the syncretism of client and agent,they form a close contact with controlling shareholders in long-term cooperation. Thus, the executives have a super power, and the internal control mainly on executives forms. The external examination and approval system of executives compensation exist in name only, the independence of internal remuneration committee and independent directors is poor, then managerial power gets stronger and stronger. The soft constraint of state-owned companies’ budget and the imperfect market mechanism, all these make the executives have the ability and intention to use their own power to influence their own compensation incentive.Based on management authority theory, this paper analyzed the mechanism of executive power influence the executive compensation incentive. We build composite indicators of managerial power through the variable of CEO Duality, CEO tenure, decentralization of stocks and managerial comprehensive power. By using the samples of Chinese state-owned companies over 4 years from 2010 to 2014, this paper studied the influence of executive power on compensation incentive from the aspects of monetary compensation and perks.The main conclusions of this paper are as follows:(1) In China’s state-controlled listed companies, the management authority and executive compensation have significant positive correlation, the larger the management authority, the higher the executive compensation.(2)In China’s state-controlled listed companies, the management authority will reduce the sensitivity between executive compensation and performance. Executive salaries are more sensitivity to the profit than the loss.Finally, on the basis of the theoretical and empirical analysis, this paper proposes appropriate comments and suggestions.