Government Regulation, Corporate Governance, And Executive Compensation

As is known to all, the core of modern corporategovernance construction is the separation of ownership and management, it improves the efficiency of company operations,but also takes the principal-agent problem. The senior executives’ salary system is the most important incentive to the company management, so is a hot area of economics, management,law and psychology research. In the paper, we discuss the influence of marketing and government on the senior executives’ salary system systematically and comprehensively. Based on the literature review of the relationship between corporate governance, property rights,administrative policy, political association, political rewards and the senior executives’ salary system, we design a tournament model about the impact of the political rewards on the sensitive of pay for performance, and put forward three research hypotheses. According to different research objects, empirical research divided into two parts of private listed companies and state-owned listed companies. First of all, we apply the fixed-coefficient model and random-effects model and so on to analyze influence factors of the sensitive of pay for performance on the private listed companies, especially the corporate governance factors, and then evaluate the stability using the fixed-coefficient model and the regression model.According to the results, we give some advices like improving the system of supervisory committee and ensuring the independence of the independent director. Secondly, we apply the fixed-coefficient model about the relationship between corporate governance, property rights,administrative policy, political association, political rewards and the senior executives’ salary system, what’s more, we also finish the stability test. It proves that not only government policy“ limit the pay of senior executives” but also political connection have significant negative impact on the sensitive of pay for performance. It is also the reason why property rights influent the sensitive of pay for performance. Finally, we build political compensation as explanatory variables, having a empirical test on the tournament model, proving that political reward has a negative effect on compensation performance sensitivity.