Research On The Relationship Between Government Subsidies,Enterprise Performance And Executive Compensation

Government subsidies are one of the important means of government macro-control.With the support of the government,more and more enterprises have received government subsidies in recent years.The original intention of government subsidies is to promote the sound development of enterprises and ensure the steady growth of social economy.However,some executives of listed companies are paid high salaries,which has aroused widespread social concern.The relationship between government subsidies,enterprise performance and executive compensation has become one of the hot issues in academic research.This paper studies the correlation and mutual influence between government subsidies,enterprise performance and executive compensation by using relevant data of Chinese a-share listed companies.This paper reviews relevant literature on government subsidies,corporate performance and executive compensation at home and abroad,focusing on the relationship between government subsidies and corporate performance,between corporate performance and executive compensation,and between government subsidies and executive compensation.Based on the principal-agent theory,the optimal compensation contract theory,the two-factor theory and relevant institutional norms,this paper puts forward research hypotheses on the relationship between government subsidies,enterprise performance and executive compensation.Taking the listed companies that received government subsidies in China's a-share market from 2010 to 2017 as samples,this paper conducted an empirical study on the relationship between government subsidies,corporate performance and executive compensation by using multiple regression analysis and other statistical methods.The empirical research shows that: first,government subsidies for listed companies will significantly improve corporate performance;Second,corporate performance will increase executive compensation.In the long run,the impact of government subsidies on executive compensation will gradually weaken with the passage of time.Third,compensation increment is significantly and positively correlated with both government subsidies and enterprise performance increment.The increment of executive compensation is lower than that of enterprise performance.Finally,some Suggestions are put forward according to the research conclusion.The innovation of this paper is reflected in three aspects: first,this paper introducesthe enterprise performance variable of the relationship between government subsidies and executive compensation,and constructs the multiple regression model of the relationship between government subsidies and enterprise performance,and between government subsidies and enterprise performance and absolute amount and increment of executive compensation.Second,it introduces the cross term of government subsidy and enterprise performance,and studies the change trend of executive compensation under the joint action of government subsidy and enterprise performance through cross analysis.Three are different from those of executive compensation performance correlation research,this article embarks from the government subsidies,found that in the long run,government subsidies influence on executive compensation effect will be weakened with time gradually,the increment of executive pay are lower than the increment of enterprise performance,enrich the study of relationship between government subsidies and executive pay.