Executive Salary Incentives And Corporate Performance—Analysis Of Incentive Effects From The Perspective Of Dual Agency Costs

The compensation incentive problem of enterprise executives has been the focus of domestic and international academic circles.Compensation incentive and agency cost are closely related,and the listed companies in China are not consistent with the foreign listed companies in the content of the agency cost.Due to the equity of listed companies are relatively concentrated or highly concentrated in China,the controlling shareholders or large shareholders can take advantage of control to seek personal gain,encroach on the interests of minority shareholders,these are the second agency problem.When dealing with agency conflicts,Chinese enterprises should consider not only the problem of agency between owners and operators,but also the problem of agency between controlling shareholders or large shareholders and minority shareholders.Therefore,among the listed companies in China,there exists double agency cost problem(the former is called the first type of agency cost,while the latter is called the second type of agency cost).Only by studying the incentive effect from the perspective of double agency cost,the result could be closer to the reality of Chinese companies.At present,the research on the relationship between executive compensation incentive and enterprise performance is mainly concentrated on their influence factors.While,how the executive compensation incentive function,and the mechanism between executive compensation incentive and enterprise performance are still in the exploration.Based on previous research,this paper puts the executive compensation incentive,double agency cost and enterprise performance into a uniform analysis framework,and constructs a model with double agency cost as mediator variable,in order to explore the deep mechanism between executive compensation incentive and enterprise performance,to provide some beneficial reference for compensation system design of Listed Companies in China.This paper first systematically reviews the existing literatures on executive compensation incentive,double agency cost and enterprise performance,to make clear the basic concepts and their interrelationships.Then,we propose the theoretical framework among the executive compensation incentive,double agency cost and enterprise performance,and develop our testable hypotheses of the relationship among the three,which focused on the research on the mediation effect of double agency cost between executive compensation incentive and enterprise performance.That is,in term of executive compensation incentive,this paper first studies the influence of executive compensation incentive on enterprise performance and the governance effect on the two types of agency cost,and mainly analyzes whether the two types of agency costs play mediating roles between executive compensation incentive and enterprise performance.Further,based on existing research and the characteristics of listed companies in China,we select some appropriate indicators to measure executive compensation incentive,double agency cost and enterprise performance,and build the corresponding model.Then,this paper carries out empirical tests on the research hypotheses by using the panel data of Listed Companies in China from 2010 to 2016,and the relative robustness tests have been done to ensure the reliability of conclusions.Finally,the paper discusses the application of the research conclusions,and puts forward some policy recommendations respectively from the macro level and micro level.The main conclusions of this paper are as followed:First,executive compensation incentive has a significant effect on promoting enterprise performance.Second,executive compensation incentive will increase the first type of agency costs and reduce the second types of agency costs significantly.Third,the second type of agency cost plays significantly partial mediating roles in the process of executive compensation incentive promoting enterprise performance,while the first type of agency cost does not have mediation effect.