Research On The Relationship Between Corporate Performance,Institutional Investors' Shareholding And Executive Compensation

In the 21 st century when the economy is developing rapidly,listed companies are faced with more and more complex competitive environment and market shocks.Due to their large scale,the internal competition of the listed companies is becoming fiercer.In today's capital market,although strong and stable material capital is indispensable,it is no longer the only thing that the company pays attention to.Excellent management can bring human capital with continuous source of productivity into the public's view,especially experienced and capable.Top management personnel have become resources that we must compete for.In this situation,senior executives of listed companies are playing an increasingly important role in the development of the enterprise.It is clear that the senior management of a company with rich management experience and strong impetus is a human capital to be maintained.In actual corporate governance,there is a conflict of interest between the principal and the agent.If there is no perfect compensation contract between them,it will bring inevitable pressure and challenge to the long-term development of the company.The agent hopes that he can get higher profits,and the principal hopes that the company can gain the overall value.This kind of self-interested behavior makes the interests of the principal and the agent conflict with each other.If there is no effective incentive and supervision,the agent will pursue his own interests too much and ignore the requirements of the principal.Most of the contemporary companies exist in the form of joint-stock companies,and there is a typical principal-agent relationship between their shareholders and senior management personnel.According to the relevant research of the principal-agent theory,linking the agent's salary with the degree of his contribution is one of the effective means to effectively encourage agents and reduce conflicts.Therefore,if you want to use effective incentives for corporate executives to curb their selfish desires,mobilize their enthusiasm.It is very important to build a more complete compensation performance incentive system.However,the relationship between corporate performance and executive compensation does not only depend on managers themselves,but also on systemic factors and external factors.Institutional investors active in today's capital markets are among them.With the continuous development and improvement of the capital market,as the active body of the capital market,institutional investors have inherent advantages in terms of scale and information collection.When they gradually abandon short-sighted eyes and focus on long-term corporate interests,its attitude of actively participating in corporate governance has brought tremendous changes to the market.When institutional investors hold shares in listed companies,institutional investors,as corporate shareholders,naturally have a principal-agent relationship with corporate management,and the fund-controlling person who is the owner of investment funds assumes the responsibility of the manager.The dual agency relationship may increase the degree of information asymmetry between parties.However,from the perspective of institutional investor shareholders,it is very reasonable to actively participate in corporate governance,constantly improve corporate governance structure,promote enterprise development,and increase corporate value.And institutional investors as external shareholders of listed companies,driven by the interests of long-term investment income,will inevitably concern the governance issues of listed companies.Relevant research shows that when corporate governance receives the attention of institutional investors,its performance level will show an upward trend.The formulation of executive compensation policies may also be an important part of corporate governance.Formulating a reasonable compensation system to ease agent conflicts,reduce agency problems,and increase the loyalty of senior executives are important ways for listed companies to solve the problems brought about by the principal-agent relationship under the separation of ownership and management rights,and to retain quality human capital.This article is divided into six parts: The first part is an introduction,which mainly introduces the research background,significance of the topic,research ideas,research methods,research framework and innovation of this paper;The second part is the literature review,which summarizes and summarizes the literature review of three aspects of corporate performance,executive compensation and institutional investors;The third part is the theoretical exposition,which mainly defines the executive compensation and the concept of institutional investors,analyzes the mechanism of the relationship between institutional investors and enterprises,and expounds the theoretical basis of this article;The fourth part is the hypothesis deduction and proposition,which mainly elaborates the theoretical relationship between the related variables and puts forward hypotheses accordingly;The fifth part is the analysis of the research design and empirical results.The empirically selected samples,variables and models are described.Descriptive statistics,correlation analysis,multiple regression analysis and robustness test are performed;the sixth part is the conclusion and suggestion of the research.It mainly summarizes the conclusions drawn from the empirical analysis,and puts forward the corresponding policy recommendations according to the conclusions of the study and points out the limitations of the article.This article uses the data of listed companies in China's main board from 2011 to 2015 as the research sample,and explores the relationship between corporate performance,institutional investors' holdings and executive compensation by using a combination of theoretical and empirical methods.The same analysis was performed on the four types of institutional investors under refinement.The empirical results are as follows: The corporate performance of listed companies is significantly positively related to executive compensation;the proportion of institutional investors holding shares significantly affects the performance of listed companies,among which fund institutional investors play a significant role;under institutional investors' ownership,the relationship between corporate performance and executive compensation is even greater.Institutional investors' stock ownership will have a certain regulatory effect on the relationship between corporate performance and executive compensation.Therefore,listed companies should pay attention to the changes that occur between the executive compensation and performance of institutional investors after they are involved in governance of listed companies,and at the same time consider constructing better executive compensation incentive systems to maintain high-quality human capital in an increasingly complex market environment.