An Empirical Study On Political Relevance,Executive Compensation And Corporate Performance

Under the influence of the socialist market economic system in our country,the economic development has realized the change from government to market.However,the "political and business relations" brought about by it is also a big problem that cannot be neglected in the development process.It is the prerequisite for the harmonious development that the establishment of public supervision and equal political and business relations.At the present stage,with the continuous improvement of the market economic system,the new type of political and business relations has entered the correct track of the rule of law.But the negative impact caused by the subtle relationship between the government and the company cannot be ignored,the existence of "kinship" has different degrees of impact on the enterprise.In order to better explore the impact of this "blood relationship" on the enterprise is biased to protect or bear the effect,this paper introduces the political relevance and political relevance level to start research.In view of this kind of "government-business relationship" between government and enterprise,this paper discusses the mechanism of political association on executive compensation and corporate performance.Through the establishment of the model to analyze the collected data samples,the study is divided into five levels,the first study of political relations on executive compensation and corporate performance,and then study what kind of relationship exists between the executive compensation and corporate performance and the impact of excess remuneration brought by political relations on the future performance of the company.Secondly,the political relational variables are used as intermediate variables to study how it regulates the relationship between executive compensation and corporate performance.Finally,the endogeneity between high management and corporate performance is analyzed and processed by establishing simultaneous equations and by reference to other variables for robustness test.The study shows that higher levels of political relevance and political relevance will result in excess pay for executives,and the corporate performance will be improved;while executives’ excess pay will have a positive effect on the future performance of firms.There is an inverted U-type relationship between executive compensation and corporate performance after excluding the endogeneity between executive compensation and corporate performance.At the same time,the mechanismof political association on executive compensation and corporate performance is a negative regulatory role,that is,political association will reduce the salary of executive’s desire,the business performance will be not conducive to improve.It is essential that establish a fair and harmonious "political and business relations" for create an equal platform for the development of enterprises and improve their own performance.