Analysis On The Effectiveness Of Executive Compensation Incentive In Chinese Listed Companies

Executive compensation has always been a social concern,Especially the unreasonable events of executive compensation around 2018,has pushed the issue to the teeth of the storm.It has caused great social repercussions.In addition,the political Bureau of the CPC Central Committee and other government agencies issued a series of laws to restrict the level of executive compensation of listed companies in China.Domestic scholars have paid more attention to the research of executive compensation.Under the above background,this paper studies the effectiveness of executive compensation incentive on the basis of previous research methods and conclusions.This paper selects the data of 921 A-share listed companies in Shanghai and Shenzhen from 2006 to 2016 as the research sample.Through the Vector Autoregression Model(VAR)and Vector Error Correction Model(VECM),this paper studies the concrete manifestation of the relationship between executive compensation and corporate performance,and what factors affect executive compensation.Based on the empirical results,we find that there is a two-way causal relationship between executive compensation and corporate performance,While executive compensation is affected by company performance,company performance is also affected by executive compensation,not only by the current value of each other,but also by the past value.In addition,the longer the time,the smaller the impact.And there is a long-term equilibrium relationship between executive compensation and company size,The long-term elasticity coefficient of executive compensation is 48.5826,the short-term elasticity coefficient is 32.7210,and the error correction speed is 0.0970.When other variables remain unchanged,the executive compensation level of state-owned enterprises is lower than that of non-state-owned enterprises;Asset-liability ratio not only has a significant negative impact on executive compensation,the impact coefficient is-0.0016,but also has a significant negative impact on corporate performance,the impact coefficient is-0.0091;There is a significant negative correlation between the shareholding ratio of the first largest shareholder and executive compensation.The estimated value of the parameters is-0.0005,but there is a significant positive correlation between the shareholding ratio of the first largest shareholder and corporate performance.The estimated value of the parameters is 0.0007;In addition,the study found that there was no significant relationship between the variables such as the concurrent position of chairman and general manager,the establishment of compensation committee and executive compensation.Finally,the paper summarizes the conclusions drawn from the empirical results of this paper,and puts forward some opinions and suggestions on how to improve the corporate governance mechanism and establish a reasonable compensation management system.