The Research On The Relationship Among Executive Compensation,Risk Taking And Enterprise Financial Performance

For a long time,executive compensation is the focus of discussion among theorists and the practitioners.How to develop a reasonable and effective executive compensation system,encourage executives to better create wealth for shareholders,and maximize shareholder equity is the important content of corporate governance research.This paper analyzes the relationship among executive compensation,risk taking and enterprise financial performance and the intermediary effect of the risk taking pay on executive compensation and enterprise financial performance.It aims to provide more practical guidance in promoting the long-term development of the enterprise,improving the corporate governance mechanism and making reasonable senior management pay-system.This study reviews the research results of the relationship among executive compensation,risk taking and enterprise financial performance at home and abroad,summarizes the relevant concepts and measures of the three,then this paper analyzes and combs the theoretical relationship among the three,and the empirical hypothesis of empirical test constructs the relevant empirical model.The data of 792 listed companies(454 state-owned enterprises and 338 non-state-owned enterprises)in Shanghai and Shenzhen A-share market were selected as the research object,and analysis software such as EXCEL and STATA were used in data processing to test the relationship among the three and the intermediary effect of the risk taking.The results show that there is a significant positive correlation between corporate risk taking and executive monetary compensation incentive,and compared with state-owned enterprises,monetary incentive of non-state-owned enterprise executives have the greater impact on corporate risk taking.There is a significant positive correlation between salary incentive and corporate financial performance in China's listed companies,and there is no significant correlation between executive equity incentive and risk performance and firm financial performance.There is a significant positive correlation between firm financial performance and risk exposure.The risk bearing plays a mediating role between executive monetary reward incentive and firm financial performance.Based on the findings of the study,this paper presents relevant policy recommendations: The firms should formulate a series of policies to promote the promotion of corporate financial performance through the management of executive pay.In the design of executive compensation system,we should fully consider the enterprise's risk-taking effect.Establishing a sound executive compensation system and an effective executive pay supervision system,as well as a reasonable enterprise financial performance evaluation system to improve the transparency of corporate executives pay disclosure is an important thing;Using the implementation of pay incentives to improve business financial performance,managers should be a reasonable control of the level of corporate risk;the establishment of risk management committee,improving the board of directors and board of supervisors system to strengthen the internal control of risk project decision-making is good for firms.Optimizing our corporate governance mechanism,such as diversified corporate ownership structure,expand the scope of insider holdings is in order to improve the positive relationship among the executive compensation?corporate risk taking and performance of corporate financial performance.The pace of enterprise reform and the reform of state-owned enterprise corporate governance mechanism should be more quickly.State-owned enterprises must improve the appointment system of executives,weaken the control of government in state-owned enterprises,and promote the diversification of ownership structure of state-owned enterprises.