Research On Effects Of Managerial Power On Executive Compensation Stickiness Of State

The compensation contract of relating executive compensation to enterprise performance is more and more used by the enterprise owners for the purpose of reducing agency costs,making a certain correlation between enterprise performance and executive compensation.However,it is equivocal that whether the compensation contract has enough effects on reducing the agency costs.Some studies have confirmed that executive compensation stickiness,as one of the representations of agency costs,is exactly exist in many enterprises.In fact,executive compensation stickiness is that the sensibility of the executive's salary performance when the performance of the enterprise is dropping is greater than that when the performance of the enterprise is rising and the result of executives taking advantage of their position advantage for personal gain.Therefore,managerial power may have an impact on executive compensation stickiness.And the internal control,the internal governance mechanism that restricts managerial power,may have some influence on the relationship between managerial power and executive compensation stickiness.Based on principal agent theory,optimal contract theory,managerial power theory and two factor theory,the article studied the influence of managerial power on executive compensation stickiness from the angle of moderating effect of internal control.In this paper,2014~2016 listed companies of A shares in Shanghai and Shenzhen two cities are selected as the research samples and descriptive statistics,correlation analysis,factor analysis and regression analysis were used.Firstly,the natural logarithm of the top three top managers' salaries were taken as explained variables,and the natural logarithm of net profit excluding the nonrecurring gains and losses were taken as the explanatory variables,and a regression model was built to test the existence of executive compensation stickiness;secondly,five indexes that are two part-time staff,general manager of tenure,the size of the board of directors,whether the executives hold the company's shares and whether the executives have part-time job outside were composed into one index named managerial power index by the factor analysis method were added to the regression model to study the influence of executive power on executive compensation stickiness;lastly,dividing all the samples into two groups in accordance with internal control index to study the moderating effect of internal control on the above effects.Conclusions drawn on the basis of the empirical results are as follows: firstly,the executive compensation stickiness exists in some state-owned listed companies,which proves that the compensation contract,which aims at alleviating the agency cost,did not cut the agency cost,but turn into a part of the agency costs;secondly,executive power has a positive effect on executive compensation stickiness,executives will use its position to bring power,influence and even capture the board of directors and then intervene the formulation and evaluation of compensation contracts,causing the result that the board of directors is not fully representative of the interests of shareholders and executives get high salary which is not reasonable;thirdly,high quality internal control can supervise and control executive behavior,thereby inhibiting that positive influence.At length,according to the verdict aforementioned,the suggestions are as follows: Setting up reasonable executive power;strengthening the supervisory function of the board of directors;perfecting the executive compensation incentive mechanism;improving and practicing the internal control system of the enterprise.