The Study On The Impact Of Executive Compensation Incentive System On Agency Cost In Chinese State-Owned Enterprises

Executive compensation incentive system is the key to solve the principal-agent problem between shareholders and management.If designed reasonably,it can effectively alleviate the principal-agent conflict between shareholders and management,encourage management to improve work efficiency,improve company value and increase shareholders' wealth.On the contrary,it may lead to incentive failure,and then lead to the principal-agent problem and damage shareholders' interests.Unlike private enterprises,the price of managers' factor is determined by their market supply and demand,the nature of state-owned enterprises' public property rights and the diversification of government management objectives are important factors affecting managers' salary system in state-owned enterprises.State-owned enterprises are nominally owned by the whole people,but in actual management,many powers are occupied by managers.The beneficiaries of executive compensation may be executive compensation makers.Therefore,some state-owned enterprises may have unreasonable salary formulation.When most scholars study the effect of executive compensation incentive system in state-owned enterprises,they think that state-owned enterprises have the same characteristics and functions,which is obviously unreasonable.On the one hand,in state-owned enterprises with monopoly advantages and policy advantages,managers' interests and profits are closely linked,obviously ignoring the difference between them relying on monopoly privileges and relying on working ability to obtain profits.On the other hand,in order to maintain social equity and stability,the “one-size-fits-all” approach limits the salary of state-owned enterprise managers to a lower level,and reduces the enthusiasm of state-owned enterprise managers.Therefore,the design of a reasonable executive compensation system should be based on the classification of state-owned enterprises as a prerequisite for research.On the basis of summarizing the existing literature and based on the current situation of executive compensation incentive in Chinese state-owned enterprises,this paper combines theory with empirical research to discuss and analyze the internal relationship between executive compensation incentive and agency cost,aiming at providing reference countermeasures for the executive compensation incentive system under the background of the classification reform of state-owned enterprises.This paper is mainly divided into six chapters: the first part is the introduction.This paper briefly introduces the research background and significance,and discusses the research methods and research framework,pointing out the innovation and shortcomings of the article.The second part is related theoretical analysis.Firstly,the concept of classification of state-owned enterprises is defined,including “dichotomy” and “trichotomy”;the concept of executive compensation is defined,including monetary compensation,equity incentive and on-the-job consumption;and the concept of agency cost;secondly,the theoretical basis of research on executive compensation system of state-owned enterprises is introduced,including principal-agent theory,stakeholder theory,optimal contract.The third part elaborates the evolution process,current situation and main problems of executive compensation system in Chinese state-owned enterprises.Due to the different nature of state-owned enterprises,the reform of executive compensation in state-owned enterprises should not be “one size fits all”.Moreover,its single performance appraisal system and single supervision means are also important reasons for agency costs;the fourth part is empirical test.Define variables and design test models;Empirically test the correlation between executive compensation and agency cost of different types of state-owned enterprises by SPSS software;and analyze the differences according to the results;Part V,put forward reasonable countermeasures and suggestions for different types of state-owned enterprise executive compensation system.At the end of this paper,according to the current background of China's classified reform and the existing problems of different types of state-owned enterprises' executive compensation system,the author gives relevant suggestions on how to improve the executive compensation system of stateowned enterprises;the sixth part is the conclusion.The analysis of the whole article is summarized.