Internal Control,managerial Power And Executives Compensation Stickness

The executive compensation of listed companies has been highly concerned by the public since the disclosure of executive compensation from the listed companies in the annual reports.As an important mechanism to solve the problem of agency,executive compensation contract has an important effect on the development of the company.At present,the performance salary appraisal system has become the basic choice of listed companies,and the sensitivity between executive compensation and performance has gradually increased.However,in recent years,the compensation mess presented in the market has raised questions about the incentive mechanism of executive compensation.For example,in 2007,the salary of 60 million yuan in China's safe CEO Ma Mingzhe is still discussed by the public.In 2016,there has been a decline in performance but an increase in salary.The net profit of Jinling mining(000655)was about-5.6 billion,which decreased by about 5484% compared with the same period last year,but the executive pay in 2016 was 1 million 182 thousand and 300,which increased by about22.98% compared with the 961 thousand and 300 yuan in 2015.Does the backside of these pay packages show that performance-based pay checks fail? What are the factors that affect the stickiness of executive pay? The existence of executive pay sticky shows that the compensation contract is incomplete at present,and the principal-agent problem is still an important problem affecting the healthy development of enterprises.As an agent's management,does the size of its power affect executive pay stickiness? And internal control standard system in our country has basically established and implemented in the listed company,the internal control as the basis of corporate governance,whether it will affect the stickiness of executive pay? Those are worth further study.Therefore,it is of great practical significance to study executive compensation stickiness in the current context to improve the executive compensation contract and alleviate the agency problem.From the perspective of internal control and management power,this paper studies the stickiness characteristics of executive compensation,and uses the method of theoretical analysis and empirical test to study the relationship between internal control,executive power and executive pay stickiness.First of all,on the theoretical level,using the principal-agent theory,the optimal contract theory and management power theory to analyze the influence of internal control and management power on executive compensation stickiness,and according to the analysis and the actual situation of listed companies in China,the paper puts forward the research hypothesis;Secondly,in the aspect of empirical research,the article starts the descriptive statistical analysis,correlation analysis and regression analysis with the use of A-share listed companies relevant data of motherboard between 2012-2016,and on the base of previous models,performs the regression analysis.Finally,according to the empirical regression results,the paper summarizes the conclusions and puts forward some pertinent suggestions.Through empirical regression analysis,this paper draws the following conclusions:(1)Management power has a positive impact on the stickiness of executive compensation.This shows that the greater the power of the managements,the more they can use their own power to influence the formulation and implementation of the salary system,which make the board of directors pass to their own compensation contract,thereby increasing the asymmetry of the performance sensitivity of the executive compensation when the performance is rising and falling,and thus aggravating the stickiness of the executive compensation.(2)Internal control has a negative impact on the stickiness of executive compensation.That is,the more effective the internal control is,the more it can restrain the stickiness of executive compensation.High quality internal control can reasonably guarantee the true integrity of financial information,improve the quality of accounting information,and thus more reasonably evaluate the level of the executive's efforts and its performance.The perfect performance appraisal system is another guarantee for the remuneration contract,which is helpful for the effective implementation of the remuneration contract.(3)High quality internal control weakens the positive effect of management power on executive compensation stickiness.This indicates that the higher the quality of internal control is,the more effective supervision and restriction can be for management,which will inhibit the management's use of power to manipulate profits to raise salary.After considering the nature of property rights,the weakening effect of internal control on the positive correlation between executive compensation stickiness and management power is more significant in state-owned enterprises.