The Nature Of Property Rights,Executive Excess Compensation And Stock Crash Risk

Executive compensation is considered to solve the problem of shareholders and management,and also is one of the important mechanisms of corporate governance.As one of the mainstream incentive theory,the effective contract theory holds that the design and implementation of the incentive contract is conducive to guarding the agents' moral hazard,coordinating the agency conflict between the shareholders and the management.On the contrary,the theory of managerial power argues that executive compensation tends to become the self-interest product under managerial power,which is a part of agency cost.In recent years,the phenomenon of “astronomical remuneration” of listed companies and the “hanging reverse” of executive compensation have also caused the public to discuss.Whether the executive salaries are effective incentives under the “efficiency theory” or the self-interest products under the “power theory” has always been the focus of debate between academia and practitioners.After the global financial crisis in 2008,the collapse of stock prices in the capital market led to people thinking about the risk of stock price collapse.Based on the asymmetric risk framework of information asymmetry theory,this paper divides the excess executive compensation into the research of the factors that affect the stock crash risk,breaking through the research status of executive compensation effectiveness from the profit frame.The view of stock crash risk is to test whether the executive compensation is consistent with the view of efficiency or the view of power,so as to deeply analyze the incentive effectiveness of executive excess compensation and the cause of stock crash risk based on salary motivation.This paper also takes into account the influence of the nature of property rights,and makes a comparative analysis of the relationship between the executive excess compensation and the stock crash risk under different property rights.This paper consists of six parts: The first part is the preface,which expounds the research background,significance,content and research methods of this paper,and the research frame and possible innovation.The second part is literature review,summarizing and combing the literatures about executive excess compensation and stock crash risk respectively.The third part is related concepts and theoretical analysis,lying a theoretical foundation for the following research.In the fourth part,based on the theoretical analysis of the third part,the hypothesis is deduced,the hypotheses are put forward,the variables are introduced and the research model is constructed.The fifth part is the empirical test,mainly using the software of stata12.0 for empirical research,based on the descriptive statistics and the correlation analysis,the regression model is used to analyze the whole sample and the group sample respectively.In order to make the conclusion more stable,this paper redefines the compensation of executives and substitutes the former variables for the robustness test.The sixth part is the research conclusion and the policy suggestion,and points out the limitation of this research and the future research prospect.The conclusions of this paper are as follows: Firstly,the whole sample firms' executive excess compensation are positively correlated with the stock crash risk,but the hypothesis is not validated.The reason is that the theoretical frameworks of enterprises with different property rights have different manifestations,so the study of the executive excess compensation and stock crash risk must take into account the impact of the nature of property rights.Secondly,in state-owned listed companies,executive excess compensation is significantly positively related with stock crash risk,this result shows that executive compensation is self-interests in state-owned listed companies,but this phenomenon only exist in local state-owned listed companies.Thirdly,in private listed companies,executive excess compensation is negatively related with stock crash risk,but not significantly,this result shows that executive excess compensation is more incentive in state-owned listed companies then in private listed companies,but this incentive is very limited;Finally,the relationship between executive excess compensation and stock crash risk is significantly affected by the nature of property rights.This paper provides a theoretical basis for the construction of the executive compensation mechanism of listed companies with different property rights,and reflects the stock price collapse effect based on incentive motive,which is of great significance to improve the incentive contract of listed companies.This paper also has a positive significance to reduce the stock crash risk and protect the interests of investors.