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Executive Pay External Fairness,Equity Nature And Business Performance

Posted on:2017-10-10Degree:MasterType:Thesis
Country:ChinaCandidate:T WangFull Text:PDF
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With the continuous development of China’s economy and capital markets,executive compensation has become a hot discussed social issue.Recently,there are a lot of news about the "astronomical salaries",Behind this phenomenon,it may happen that salary levels extremely disproportionate with the development level and performance levels of the company.Even some situation may occur that the performance is declined but the senior management pay rises.This allows the community gained more attention to some questions:whether the incentive of salary is valid and the economic and whether social benefits generated by salary have long-term development for the company’s performance.Since 2010 government work report put forward to reversing the trend of widening income gap,the topic of social fairness had been brought to the hot spots.The guidelines "giving priority to efficiency due consideration to fairness" are no longer applicable,our country is now entering the stage "Fairness and Efficiency on the one hand "to achieve" pay more attention to social fairness".A series of government policy such as "salary limit order" intended to step up the control of SOE executive monetary pay.In this institutional background,executive pay equity issue has started to appear.Starting in 2005,each one of the current directors,supervisors and senior management remuneration start to disclosure executive compensation to public.Disclosure for the salary can make listed companies executive obtain the same level of other companies’ management compensation information to be compared with each other to produce the concept of fairness to adjust their behavior,and ultimately affect the company’s management efficiency and performance.Whereby the pay equity has started to become a worthy research question in our country.Based in 2012-2014 China’s Shanghai main board listed companies’ executive compensation as the research object,using principal-agent theory,behavior theory,tournament theory and other related theories,this paper to investigate the fairness of currently existed executive compensation equity issues from the external angle of enterprises.This paper analyzed what impact the company’s performance;considered the different nature of the ownership of listed companies,thought about their roles in executive compensation to company performance external equity relationship influence,considered the nature of the property whether brought different effects to different external equity executive compensation and corporate performance relationship,whether its influence is obvious,whether there are other factors that have a greater impact on the fairness of the external executive compensation and corporate performance.The results show that there existed a big external pay inequity issue in our country.SOEs samples Multiple regression analysis showed that when executive pay levels in the positive,there has negatively correlated between the positive changes in the relative pay and company performance.When pay levels below the industry average,the pay relatively negative was negatively correlated with the company’s performance,the lower the salary of state-owned enterprises have more power to improve enterprise performance.For non-state-owned listed companies,state-owned enterprises with different results when executive pay is higher than the industry average salary,positive relative performance businesses pay to play a positive role;less than the industry average,and negative relatively pay positively correlated with the enhance of corporate performance.That is,the lower the levels of executive pay,it will not enhance the positive impact on business performance,the lower salaries are,the less motivated executives have to improve business performance.The more close salaries to average,the more executives are willing to improve company performance.This paper is divided into six parts:The first part,introduction.This section describes the background,purpose,significance and innovation of this paper,and proposes research framework and methodology of the whole paper.The second part is the literature review.It reviews the theoretical literature among executive pay and external equity of executive currency pay and corporate performance,which has laid a theoretical foundation for the empirical study later.Review the executive pay equity quantitative research,and follow-up research prospects,provide empirical evidence for the letter study.The third part,the theoretical analysis and hypotheses,including the definition of related concepts,the introduction of executive compensation theory,equity theory and the theory of executive compensation gap,put forward the hypothesis of this paper with the relevant theory.The fourth part,the research hypothesis and research design.It is the main part of this paper..The main contents include variable definition and quantification according to the proposed hypotheses,modeling,description of sample selection and data analysis methods.The fifth part is data analysis and analysis results.This chapter provides descriptive analyses,correlation analyses and regression analyses to test the rationality of hypothesis,reveal relations of various variables,and provide prove for the data.The sixth part is conclusion.Referring to the regression results of empirical research,provide reasonable suggestions for the situation of the incentive for executive compensation and the designed for executive compensation contracts and future prospects for further research.Combined with the results of this study,we propose the following recommendations:(1)It should be strengthened emphasis on fair distribution of procedural and interactional justice on the respect of salary allocation,it must reflect the principle of fairness during the all process of salary distribution(2)Market should improve the market mechanism in China manager step by step,referencing to the mature experience of market operation mechanism in wester developed countries,combining the characteristics of China’s socialist market economy,to develop the socialist market manager system which meets the China’s national economic conditions.(3)Improving executive compensation disclosure system.(4)Formulating more comprehensive compensation mechanism.
Keywords/Search Tags:Executive Compensation, External Equity of Executive Compensation, Property Rights, Enterprise Performance
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