Government Subsidies, Insider Control And Executive Compensation

The optimal compensation contract theory linked pay to performance,aiming to solve asymmetric information problem between he principal and agent,but when executives make decisions can't completely accord to shareholders' interests as the first goal because of the principal-agent problems,and thus gain more compensation to satisfy their own desire.The large gap between Executives sky-high compensation and people' s income caused a public questioning,in order to maintain social harmony,the government enacted the compensation regulation and reform scheme,these schem-es to realize the rationality of the income distribution order,the appropriate of compensation and adjust the unreasonable compensation.Based on the background of the reform of state-owned enterprise salary,this paper study the correlation between executive compensation of listed companies in our country and government subsidies.Executive can increase their pay levels to satisfy their own desire by means of two approaches,the one is putting government subsidies fiction into profit surplus which can rapidly improve the company's short-term performance,the other one is direct gaining from government subsidies.Therefore the author thinks that the government subsidies and executive pay may exist a certain correlation.Whether government subsidies can ultimately achieve the goal of benefiting the enterprise and whether the government subsidies' flow deviates is worth further research.This research based on 10940 research samples which obtains from the A-share listed companies in Shanghai and Shenzhen from 2010 to 2015.Firstly,based on the background of executive compensation control in state-owned enterprises,combined with literature and theoretical research results at home and abroad and based on the principal-agent theory,the optimal compensation contract theory,manager power theory and pay justify hypothesis,this paper analyzes the the correlation between various explanatory variables and explain variables and puts forward the research hypothesis;Then this paper makes descriptive statistical analysis and correlation analysis of all the relevant variables and preliminary analysis of insider control of the situation,executive compensation,the current situation of government subsidies and economic factors of the correlation between each variable of domestic listed companies.Secondly,this paper conducts specific empirical validation to analyze by using regression model system the government subsidies and executive pay,the influence of insider control on the correlation between government subsidies and executive pay,the correlation between the government subsidies and executive pay justify.Finally,this paper draws the following conclusions:the government subsidy can put positive effect on executive pay?executive overpay,which further illustrating the rent-seeking behavior of executives in government subsidies.Government subsidies in the non-state-owned enterprises,the correlation between government subsidies and executive pay is more prominent.The insider control has remarkable effect on the correlation between government subsidies and executive pay and the influence of the insider control is more significant in the state-owned enterprises.Government subsidies improves the correlation between compensation and performance,which verifies the executive compensation defense needs,in the non-state-owned enterprises,government subsidies sensitivity effect of compensation performance is more significant so executive compensation motivation is stronger in the non-state-owned enterprises.Finally,on the basis of theoretical analysis and empirical research,this paper put forward the solutions such as standardizing the use of government subsidies,controlling the problem of insider control,perfecting the corporate governance structure and improving the optimal compensation,etc.