Empirical Research On The Relationship Between Government Subsidy And Executive Excess Pay

The optimal compensation contract theory is believed to solve the problem of information asymmetry between executives and shareholders.However,the executive compensation is out of line with the performance,and the phenomenon that the executive compensation does not decrease but increases when the corporate profit declines is still happening.According to the theory of management power,compensation contract does not solve the principal-agent problem,but becomes the means of management power rent-seeking,and the problem of excessive executive compensation is prominent.Government subsidies as other income,often be recorded into the profits in the compensation contract,but it cannot response executive ability and the degree of effort,will make executives don’t work hard to produce high compensation,both as a non-recurring profit and loss increase the short-term performance of the enterprise,or direct access to this part of the benefits will lead to executives earn extra compensation.If executives use their power to obtain excessive compensation,it will affect the future development of the company and the fair distribution of social resources.In order to alleviate this problem,many scholars have studied the influence of corporate governance structure and supervision mechanism on this problem.Improving corporate governance structure and supervision mechanism will improve the effectiveness of compensation contract.In view of the above discussion,this paper studies the relationship between government subsidies and excessive executive compensation,enriching the research in the field of compensation.In this context,this paper analyzes the relationship between government subsidies and excess executive compensation,the moderating effect of management power on the relationship between government subsidies and excess executive compensation,as well as the differences in the nature of different property rights,and further analyzes the influence of corporate supervision mechanism on the relationship between the two.This paper selected listed companies from 2013 to 2016 as samples,and drew the following conclusions through empirical analysis :(1)there is a positive correlation between government subsidies and excess executive compensation,which provides an explanation for the source of excess executive compensation;(2)the power of the management plays an active role in the relationship between government subsidies and excessive executive compensation.When the power of the executive is relatively large,the executive will have more room for rent seeking,be more capable and motivated to conduct rent-seeking behaviors,and obtain excessive compensation;(3)the management of power regulating effect varies according to the nature of property rights,relative to the state-owned enterprises,the adjustment effect of non-state enterprise management power is stronger,due to the executives of state-owned enterprises is not only the supervision of the board of directors and board of supervisors etc.,but also by the central and local government and the supervision of the state-owned assets supervision and administration commission,so even in the case of executive power is larger,the executives of state-owned enterprises rent-seeking opportunities and rent-seeking effect is lower,so the effect of the regulating in non-state enterprises management power is stronger;(4)the scale of the board of supervisors has a negative regulating effect on the relationship between government subsidies and excess executive compensation.The larger the scale of the board of supervisors,the weaker the relationship between government subsidies and excess executive compensation.(5)the proportion of independent director in the relation between the government subsidies and executive pay extra played a negative regulation role,the higher the proportion of independent directors,government subsidies and the weaker the relationship executive excess compensation,supervision mechanism of independent directors as a relatively independent,the independent director’s intervention has formed the management of a external pressure,independent directors do not have any contact with the company’s managers,shareholders,to supervise the behavior of the executive,prevent them from using their power grab self-interest,which damage the interests of the shareholders.According to the theoretical analysis and empirical research results of this paper,the government level and the company level of the relevant policy recommendations.Among them,the government level should establish a strict audit mechanism to make the government grant more fair and reasonable;Strengthen the supervision of government use;Transform the functions of government.At the company level,detailed information on government subsidies should be disclosed;Strengthening corporate governance and balancing management power;Improve the design of executive compensation and performance appraisal.