The Influence Of Management Power On Executive Compensation

Executive pay has always been one of the most controversial topics, especially after outbreak of the global financial crisis, the Wall Street financial institutions executives with a high annual salary of millions of dollars have attract the public’s attention and strong attacks. Chinese listing corporation executives can not survive. Chinese scholars make less research concerning the influence of managerial power on executive compensation. In this paper, the emphasis of the research is on the difference of the managerial power’s influence on executive compensation in the different nature of the property listed companies based on the institutional background of China.In this paper, based on the review of concerning theories and analysis of the system backgrounds, managerial power exists because of the defects of corporate governance formed in the process of the market-oriented reform. Top managers not only seek for the improvement of their own salary, but also further widen the pay gap with other employees. Executive compensation shows obvious characteristics of the viscous. It increases when the performance of the corporation promotes but not declines with the slowdown of the performance.This paper combines normative research method, empirical research method and comparative research method in order to research the influence of management power on executive compensation. The concerning research at home abroad just investigate the sensitivity between executive compensation and firm performance about state-owned listed companies. One of the innovations of this research is the comparative analysis based on property rights perspective, dividing samples into state-owned listed companies and non-state-owned listed companies. Meanwhile, this article calculates the indicator of management power through factor analysis instead of addition.