Research On Influence Factors Of Executive Consumption Under The Background Of “Limited Pay Policy”

With the establishment of modern enterprise system and the development of the profe-ssional service market,more and more professional managers who are employed by the enterprise owners begin to in charge of the daily management.As known,when the business ownership and management are separated,the agency costs rise accordingly.Reasonable monetary compensation and executive stock ownership plan are common methods that used by enterprise owners to motivate managers.They helps to encourage the professional managers to work for the goal of enterprise value maximization.At the same time,the enterprise owners allow managers to have moderate executive consumption.But current research results suggested that to meet or extra self-interest,managers would like to have excessive consumption during the daily work,which should have a negative impact on the enterprise value and enterprise performance.Compensation incentive and consumption of executive have been the hot topics for domestic and international scholars after the principal agent theory proposed.Since 2009,both “sky-high compensation” and “zero compensation” appeared in executive compensation in Chinese enterprises,which gained wide public attention.Chinese government began to issue a series of documents to adjust and restrain the executives' compensation.From January 1st 2015,the government taken a more strict reform of compensation system mainly in state-owned enterprises into action.We call it “Limited Pay Policy”.It seems that the policy has worked.All the listed enterprises begin to limit the payment of executives.But the real situation is less clear cut.As the “Limited Pay Policy” plays an important role in executive compensation.The paper is to research the executive consumption and its influence factors based on this background.This article selects the data of 380 listed enterprises of the Shanghai and Shenzhen's A shares listed enterprises in China,making empirical analysis by using multiple regression models and studying on the relationship between executive consumption and its influence factors.The results indicates that both monetary payment and executive consumption are generally decreased along with the implementation of the compensation regulatory policies.And we also get conclusions as following:(1)Both the executive consumption and monetary payment are decreased because of the policy.The correlation between executive consumption and monetary payment is significantly positive.But the positive relationship is weakened under the influence of the policy.And it is more obvious in state-owned listed enterprises because of the policy target.(2)Free cash flow is significantly positively related to the executive consumption.The positive relationship is weakened under the influence of the policy.While the decrease is more obvious in state-owned listed enterprises.(3)Finance constraint has negative control response on the relationship between executive consumption and free cash flow.That is to say,the higher finance constraint faced by the enterprises,the weakened relationship between executive consumption and free cash flow.Under the influence of the policy,the control effect is abate more obviously in state-owned listed enterprises.In closing,the paper offers some corresponding recommendations to improve the executive compensation and motivation mechanism based on empirical research.This paper may exit the following innovation points: First,for most of the existing researches were aimed mainly at state-owned enterprises.This paper has made a comparative study on relationship between executive consumption and its influence factors in state-owned enterprises and private enterprises.Since the policy is implemented from 2015,the paper also analyzed the change of correlation before and after the “Limited Pay Policy”.Second,this paper add a control variables named “Finance Constraint” to the relationship between executive consumption and free cash flow,trying to prove the control effect it made and analyze the relationship from a new perspective.