Empirical Study On The Influence Of Decision-Making Power Allocation On Executive’s Self-Interests

The separation of ownership and control actually makes important contribution to the development of modern joint-stock company,but also leads to the information asymmetry between shareholders and management,which leads to agency conflict.Although the agency conflict can be alleviated by the effective compensation contract,it is apparently affected by other factors including corporate governance,management rights and external governance environment.Managerial power hypothesis argues that the separation of ownership and control will motivate managers to pursue self-interest(including excess income,excessive duty consumption,more earnings management for private benefit and excessive investment for high payment)by utilizing their power.Therefore,it is necessary to explore the effective management of self-interest behavior that seriously damage shareholders interests and enterprises development.Several relevant researches showed that reasonable institutional environment and perfect corporate governance mechanism can relieve agency conflicts to a certain extent.However,the firm power structure will undoubtedly play an important role in the executives’ self-interest behavior.For this,we utilize the data from Shanghai-listed A-share manufacturing listed companies(from 2008 to 2013)to analyze the influence of the separation degree of decision-making power and decision-making control power on the self-interest behavior of executives,and discusses regulatory effect of ownership structure based on the actual situation in China.The detailed contents are as follows:Firstly,based on the theory of managerial rights,this paper analyzes the action mechanism and actual basis of decision-making power allocation.Specifically,this paper describes the executives’ self-interest behavior of by selecting the excess monetary compensation,duty consumption,the salary gap between executives and employees and pay-performance sensitivity,and empirically investigates the effect of decision-making power allocation on executives’ self-interest behavior.The results show that the decision-making power allocation is significantly positively correlated with the excess monetary compensation,duty consumption and the salary gap between executives and employees,which indicates that the executive will use their right to seek self-interest.Especially,in non-state-controlled enterprises,the greater power,the more serious this phenomenon.Secondly,based on the reality of China,this paper further investigates the influence of political association on the relationship between the allocation of decision-making power and the self-interest behavior of executives.In this paper,the sample is divided into state-controlled enterprises and non-state-holding enterprises according to the nature of property rights,and the regulatory role of political association is explored respectively.The results show that political association will significantly strengthen the private behavior of enterprise executives,but reduce the level of duty consumption.In addition,in the same.separation degree of decision-making power and decision-making control,the degree of self-interest is more serious in non-state-owned enterprises.Thirdly,based on the controversy on whether the excess money salary and the duty consumption are "efficiency" or "rent-seeking",this paper analyzes the actual situation of the manufacturing industry.The results show that the excess cash compensation and duty consumption are positively correlated with the performance of the firm.That is,the duty consumption and excess salary can make up for the shortcomings of executive incentive and promote the enterprise performance and play the role of "hidden incentive".In the end,this paper tries to further test the value change of political association before and after the anti-corruption,and finds out that the introduction of the anti-corruption policy not only reduces the value of political connection in helping enterprises to obtain scarce resources and promoting business performance,but also weakens the regulatory role of political association between the decision-making power allocation and self-interest behavior and decreases the non-productive costs of the enterprise effectively.Based on the above research,the possible innovations of this paper are as follows:Firstly,this paper systematically discusses the influence of decision-making power allocation on executives’ self-interest behavior.The majority of existing researches which studies management rights and executive self-interest behavior are single analysis of duty consumption or pay-performance sensitivity,and little research involve excess monetary compensation,duty consumption,the salary gap between executives and employees and pay-performance sensitivity at the same time.Secondly,this paper further consummates the path mechanism of decision-making power allocation affecting enterprise’s performance.On the basis of existing research,this paper further explores the influence of decision-making power allocation on executives’ self-interest behavior,and analyzes the effect of excess monetary salary and duty consumption on enterprise performance,revealing the complete logical chain of decision-making power allocation,executives’ self-interest behavior and enterprise performance.Thirdly,based on the current social phenomenon of corruption,this paper analyzes the value of political association before and after the New Deal of anti-corruption and the relationship between the allocation of decision-making power and the behavior of self-interest.The comparative analysis not only proves the positive effect of anti-corruption from the micro-enterprise level,but also provides a new perspective to optimize the business environment,enhance the corporate governance mechanism and ease the agency problem.