Rising House Prices,Management Power And Lucky Compensation

In recent years,"sky-high salary" phenomenon occurs frequently,and the public is increasingly questioning the high salary of senior executives.The sky-high salary may be due to the phenomenon that senior executives use their own power to profit.Studies have also shown that managers use their power to earn high salaries,which include "lucky pay" as a non-performance pay.In view of the fact that "lucky pay"belongs to non-performance pay,its existence violates the principal-agent theory and the optimal contract theory,therefore,exploring the relationship between executive pay and "lucky factor" is of great significance to promote the rationality and fairness of executive pay mechanism."Lucky factor" refers to the observable factors beyond the ability control of executives,but also can affect corporate performance.The corporate performance and executive compensation generated by the"lucky factor" are called "lucky performance" and "lucky pay".In the existing research on lucky pay,the external macro-environment,industry policies and other objective factors which can not be controlled by executives but can affect the performance of enterprises have gradually become the focus of discussion by scholars,such as industry average income,oil price,exchange rate and so on.They play an important role in the formulation of executive pay.Based on the unique economic background of rising house prices in China,this paper takes the rise of house values as a tool variable to measure the "lucky" factors,and explores the phenomenon of "lucky pay" in executive compensation in China.The reason for choosing the rise of real estate value as a tool variable of "lucky factor" is that it conforms to the definition of "lucky factor".The second reason is that considering the rising house price in recent years,the change of house price has an important impact on a series of financial behavior of enterprises,so it is necessary to study its impact on lucky salary.Thirdly,it is quite innovative to study the phenomenon of high salary of senior executives at the micro level based on the unique economic background of rising house prices in China.When an industry is in good shape and the overall market is in good shape,it is entirely reasonable to speculate that the main factor contributing to these companies' good performance is rising house prices,not the outstanding performance of executives.The "lucky pay" brought by the rise.This paper finds that the main reason for lucky pay is that managers have control over the compensation system.The existence of lucky compensation is the result of the expansion of managerial power and the weakening of corporate governance structure,which deviates from the scope of optimal contract theory.This paper chooses the A-share non-real estate,financial and Construction Listed Companies in Shanghai and Shenzhen from 2003 to 2016 as the research object,The results show that:(1)when the macro house price rises,the greater the value of the property owned by the enterprise,the managers can get higher lucky pay;(2)when the management power is greater,the managers get more lucky pay.That is,in the case of rising house prices for the same rate of "lucky performance",the power of the executive lucky pay rise will be higher than the power of small executives;(3)the better the corporate governance structure,the more effective to inhibit management self-interest behavior,reduce lucky compensation.Finally,according to the research results,this paper puts forward some suggestions:(1)Perfect the enterprise information disclosure system,improve the transparency of salary formulation.(2)improve executive incentive mechanism.(3)improve the internal governance mechanism.For example,improving the independence of the board of directors,increasing the concentration of ownership and raising the shareholding ratio of the board of supervisors.(4)improve the external governance mechanism.