Market Competition,Executive Incentives And Corporate Performance

In recent years,the Central Economic Work Conference has repeatedly stressed the need to deepen the supply-side structural reforms,improve the market environment and stimulate the vitality of enterprises.Promote substantive breakthroughs in the restructuring of state-owned enterprises and reshape the micro-incentive mechanism.According to the theory of super-property rights,the effectiveness of the incentive mechanism depends on the balanced development of property rights,competition and the market.Property rights incentives can effectively improve the performance of enterprises only under the premise of market competition.In China's economic theory and business management practices,there are property rights reformist and competitive market parties.Property rights reformists believe that ownership reform is the key to enterprise reform,advocating the establishment of an effective incentive and restraint mechanism through the reform of property rights.The competitive market parties believe that the real reason for the state-owned enterprises's problems lies not in the property rights system,but in the lack of a fully competitive external environment and they think that the establishment of a competitive market system is the direction for the state-owned enterprises reform.However,how to improve the governance mechanism of state-owned enterprises and improve the performance of state-owned enterprises still requires continuous theoretical exploration and lessons learned,especially empirical evidence based on the Chinese market environment and institutional background.Therefore,this article takes manufacturing listed companies of Shanghai Stock Exchange and Shenzhen Stock Exchange from 2003 to 2015 as the research object,and conducts statistical analysis and empirical test on how market competition and executive incentive affect corporate performance.Through statistical analysis,it is found that:(1)Commodity market competition and return on net assets,as well as the trend of capital market competition and Tobin's Q value change are somewhat similar.There seems to be some intrinsic relationship between market competition and corporate performance.(2)From the perspective of change,there seems to be no intrinsic relationship between the incentive intensity of monetary compensation,the intensity of equity incentive,the return on net assets and the Tobin's Q value.There seems to be no correlation between corporate performance and executive incentive.The regression analysis of all the samples shows that:(1)Commodity market competition has a significant "U" relationship with financial performance;Capital market competitiveness has a significant negative impact on financial performance;Executive incentive and monetary performance has a significant "U" relationship with financial performance;The intensity of executive stock option incentive has a significant negative impact on financial performance;The invisible incentives of executives—the in-service consumption has a significant negative impact on financial performance;the crossover terms between the competitiveness of commodity markets and executive compensation incentives have a significant positive impact on financial performance.(2)There is a significant "U" relationship between market competition and market performance.Capital market competition has a significant negative impact on market performance.The incentive strength of executive compensation and the market performance showed a significant "U" type relationship;the executive incentive of stock ownership has a significant negative impact on market performance;the relationship between the invisible incentive of executives—the in-service consumption and market performance is significant "U" type;The cross terms between the commodity market competitiveness and executive compensation incentive have a significant positive effect on market performance;the cross terms between the capital market competitiveness and the executive incentive intensity have a significant positive impact on market performance.Further analysis of the regression analysis of state-owned and non-state-owned samples found that the above effects mainly apply to non-state-owned enterprises,and some of them are not applicable to state-owned enterprises.In particular,the competitiveness of capital markets and the intensity of executive stock ownership incentives mainly affect the performance of non-state-owned enterprises.The above research finds that it is of great significance to strengthening market construction,deepening enterprise reform,improving corporate governance and improving corporate performance.First,the maximum theoretical value found in the above study provides empirical evidence for the theory of super-property rights.That is,only by combining market competition with incentive mechanism can it help improve company performance.Second,to deepen the reform of state-owned enterprises,we must not only deepen the reform of the property rights system,but also pay special attention to the construction of commodity markets and capital markets.Third,state-owned enterprises should continue to improve corporate governance,vigorously promote equity incentives,and link state-owned enterprise executives' equity incentive with capital market and constrain senior management behavior through competition in capital markets.