Research On The "Negative Feedback" Effect Of Senior Managers' Compensation Excessive Incentive Of Chinese Listed Companies

Senior managers are the implementers of the corporate strategy and the core of the corporate agency problems.How to effectively motivate senior managers to pay their utmost efforts to enhance corporate performance with different levels of salary and how to effectively constrain the behavior of company executives are two of the important themes in corporate governance.Whether or not senior managers' compensation incentives are reasonable and effective not only relates to the corporate operational efficiency,but also infects the fairness of national income.Therefore,the issue of senior managers' compensation of listed companies has aroused extensive attention.While in certain corporations the pay of managers has dramatically increased,their performances are not as expected,which has raised concern of the market.Under the circumstance,we focus on the effect of excessive incentives for senior managers of Chinese listed companies on corporate performance.We call it the "negative feedback" effect.We take Chinese A-share listed firms as a research sample.We select the corporate performance index as the explained variable and the corporate senior managers'compensation,top three managers' compensation and excessive motivation as explanatory variables.We select the company's establishment time,time to market,and the largest Shareholders' shareholding,senior management's shareholding,registered capital,total capital stock,total assets,number of senior executives,corporate attributes,corporate regions and remuneration committees as the control variables.We use empirical analysis methods such as group regression and quantile regression to study the impact of senior managers' compensation of listed companies on corporate performance.We confirm the existence of excessive incentives for senior managers of listed companies in China,analyze the mechanism of its production.We have drawn the following conclusions:First,in all,the performance of listed companies in China is positively related to managers' compensation.However,as the level of compensation rises,the relations come to an inverted "U" shape.Excessive motivation exists in listed companies;Second,in listed companies,the phenomenon of excessive motivation for senior managers in companies with lower profits,companies in the central region and companies owned by state,was more evident;Third,excessive motivation for senior managers of listed companies poses a "negative feedback" effect on corporate performance,which not only reduces the corporate performance and increases the risk of fluctuations,but also weakens the positive impact of managers'compensation on corporate performance.The effect even turns the positive impact to be negative.Fourth,the extent of the "negative feedback" effect is closely related to the corporate attributes,the region to which it belongs,the establishment of a compensation committee and the industry it belongs to.We have the following recommendations:(1)to appropriately raise the corporate senior managers' compensation levels;(2)to establish and improve the relevant systems of the remuneration committee;(3)to strengthen renovation of the enterprises owned by state,enterprises in the central region,enterprises with lower profits and lower profitability(4)to pay attention to the fluctuations of the performance of listed companies;(5)to establish an effective market for professional managers,optimize their salary structures,and increase the transparency of their compensation information.We have enriched the research on excessive compensation incentives for senior managers and provided theoretical and practical significance for the corporate compensation management.However,there is still a need for more in-depth research and analysis on quantile regression and panel regression methods.