The Research Of Relationship Between The Non-executive Director's Social Capital And Executive Compensation

Since the beginning of 1998,China's listed companies will be paid as the necessary part of the annual report,the rapid momentum of executive pay,even if the financial crisis has almost no impact.Executive compensation is an inevitable cost for shareholders to solve the principal-agent problem.In the process of the development,management control plays an important role.How to weigh the cost of agency costs and compensation incentives,so that the executive pay at a reasonable level,will be directly related to the efficiency and effectiveness of corporate governance.Therefore,the related research of executive compensation has a very important significance for the modern company.Consequently,for the modern enterprise,whether it is the theoretical research of executive pay or empirical research has a very important significance.So,who is to play the role of the supervisor,and how to make it work effectively is a problem worthy of study.Since the concept of corporate governance has been put forward,it has been recognized that the governance of independent directors has a certain effect.But China's state-owned enterprises and family enterprises occupy a large part of the Chinese listed companies,and China's special economic system and the role of the independent director of governance is weak or not,the governance role of the board of directors greatly weakened.On this basis,the author tries to find the role of supervision to executive compensation,by reading the literature and finds that ignoring the governance role of non executive directors,non-executive directors and listed companies in China's board of directors also occupy a space for one person.This paper will be non-executive directors(excluding independent directors)as the research object,and highlights the governance role of non-executive directors,non-executive directors from the perspective of social capital theory,principal-agent theory,managerial compensation theory,resource dependence theory,social capital theory based on the empirical research on the influence of social capital on non executive directors executives salary,non-executive directors explore whether social capital can supervise the executive compensation,so as to effectively develop enterprise executive compensation decision,to further promote the reform of compensation system and effectively improve the corporate governance effect provides an important theoretical basis.In addition,in order to effectively study the effect of non-executive directors on executive compensation,this paper introduces the equity nature of this variable as an adjustment variable into the model to study the regulatory role of the nature of equity in the two.Therefore,this paper focuses on the role of the governance of non-executive director.From the perspective of non-executive director of social capital,based on the principal-agent theory,managers' compensation theory,resource dependence theory and so on,there is a empirical study of the impact of non-executive director of social capital on executive compensation,to explore the non-executive director of social capital can play a supervisory role in executive pay.It is to provide an important theoretical basis for the rational and effective decision making of executive compensation,further promoting the reform of enterprise's salary system,and effectively improving the effectiveness of corporate governance.Firstly,it is from two aspects of theory and literature review of the related content of non-executive directors and non-executive directors' social capital and executive compensation,and then makes an empirical study on the relationship between social capital and non-executive directors and executive compensation.Empirical study finds:non-executive director of social capital is significantly negative correlation with executive compensation,which is a non-executive director of the higher social capital,executive compensation is lower;the nature of equity has a significant moderating effect on the social capital between non-executive directors and executive compensation.Study conclusion:Non-executive directors can play an effective role in maintaining a reasonable level of executive pay,and compared to state-owned enterprises,non-executive director of non-state enterprises play a greater role.Finally,this paper puts forward the following suggestions:(1)pay attention to and strengthen the role of non-executive directors in the corporate governance mechanism;(2)develop a reasonable level of executive compensation and the corresponding incentive and punishment measures;(3)to improve the relevant non executive director of information in the annual report disclosure.The article also puts forward the limitations of the data,measures and other aspects of the study,and believes that the future research direction should focus on the joint governance of independent directors and non executive directors.