Equity Pledge Of Controlling Shareholders,Shareholding Structure And The Executive Compensation-Performance Sensitivity

In the past ten years,listed companies have been widely involved in equity pledge.Equity pledge can bring more funds to listed companies,but it also has an impact on the controlling shareholders’ own risks and benefits.The separation of the two rights in the principal-agent problem will cause managers to harm the interests of investors.According to the theory of optimal contract theory,if a listed company establishes a good compensation system,the manager will work according to the contract with the investor.At present,the research on the controlling company’s shareholding pledge has a lot of earnings management,cash holding policy,stock price collapse risk,research and development expenditure,etc.,but these documents rarely involve the process mechanism of the company’s senior executives as the internal person’s to the controlling shareholder’s equity pledge.Based on the perspective of executive compensation-performance sensitivity,this paper provides new empirical evidence for the negative effects of controlling shareholders’ equity pledge on corporate governance mechanisms,and studies the difference of the effect of the two on the three shareholding structures of equity nature,equity concentration,the balance of equity.This paper consists of five parts.The first part mainly draws the purpose of this paper from the current situation,and concludes that it studies the economic m otives,economic consequences,executive compensation and the factors affecting the shareholding structure of shareholders.The second part mainly introduces related concepts such as equity pledge and executive compensation,and introduces principal-agent theory,optimal contract theory and incentive theory as the theoretical basis of this paper.The third part firstly sorts out and analyzes the situation of equity pledge and executive compensation in China in recent years,and then analyzes the relationship between controlling shareholder pledge,shareholding structure and executive compensation-performance sensitivity.And Using the normative research method,deductive reasoning out the four hypotheses of this paper.The fourth part uses the empirical analysis method to study the 10465 samples selected in this paper,and compares and interprets the empirical results with the previous assumptions.The fifth part is based on the previous normative analysis and empirical research,and draws the research conclusions and policy recommendations of this paper.The analysis of this paper shows that the controlling shareholder’s equity pledge has a negative impact on the executive compensation-performance sensitivity.Under the equity structure with non-state ownership,low equity concentration and low equity balance,the effect of controlling shareholder’s equity pledge on executive compensation-performance sensitivity is restraining,but this effect has not been found under the shareholding structure in which the equity nature is state-owned,the equity concentration is high,and the equity is highly balanced.The conclusions of this paper enrich the economic consequences of the controlling shareholder pledge,and provide theoretical support for improving the equity pledge law,optimizing the company’s shareholding structure,and adjusting the executive compensation composition.