The Type Of Institutional Investors And The Sensitivity Of Executive Compensation Performance

After decades of development,institutional investors in the western countries have become an important part of the capital market and play an indispensable role in the corporate governance of the invested companies.Compensation mechanism is an important part of modern corporate governance.The study holds that institutional investors can promote the improvement of the company's remuneration mechanism and promote the improvement of the remuneration contract.However,after more than half a century of development,there are various types of institutional investors.What role do different types of institutional investors play in the company's compensation mechanism? In this paper,executive compensation performance sensitivity is used to explain the substitution rationality of the company's compensation mechanism.On this basis,we conduct a study on the sensitivity of institutional investors to executive pay performance.This article uses the data of all A-share companies from 2003 to 2016,and through the empirical analysis of the influence of different institutional investors,executive pay performance sensitivity,draw the following conclusions:(1)due to the different types of institutional investors,some institutional investors are relatively independent in the position,no commercial interest relationship with the company,some institutional investors whose position is not independent,and having companies business ties,making all institutional investors and executive compensation performance sensitivity is not clear.(2)according to the business relationship between investor relations and the company,institutional investors will type institutional investors to pressure resistant institutional investors and pressure sensitive institutional investors,pressure resistant institutional investors would adhere to their own the concept of investment,long-term investment returns,and then get the efficiency of governance income and salary mechanism.The pressure sensitivity of institutional investors are unable to do so,so the sensitivity of pressure sensitive institutional investors and the compensation performance is not related,but the pressure resistant institutional investors can be correlated with the pay performance sensitivity.(3)institutional investors will be divided into stable institutional investors and institutional investors trading according to that the institutional investors can or can not focus on long-term returns,paper find that stable institutional investors and executive compensation performance sensitivity is positively related.(4)as an independent third party,studies show that the sensitivity of QFII shareholding and executive compensation are positively related to performance.It can be concluded from the above empirical results,for enterprises,pressure resistant institutional and stable investors and QFII should be appropriate to introduce to strengthen the management for supervision,eliminating externalities and reduce agency cost in a certain extent,improve the efficiency of the compensation contract.