Executive Incentives,agency Costs And Business Performance In The Intergenerational Succession Period

The family business,a long-established and large-scale enterprise group,serves as an important engine and pillar in China's reform,opening up,and economic development.In recent years,the number of family firms facing succession in China is increasing,the success of intergenerational succession depends to a large extent on the executive team – the core strength in family business operations.Therefore,it is of great theoretical and practical significance to explore the influence of executive incentives on business performance by taking the family business under the intergenerational inheritance as a sample,it can guide the family firms to improve the executive incentive mechanism during this period,and then complete the intergenerational succession with the help of the executive team.Based on the mediating effect of agency costs,this paper studies the influence of executive equity incentives and compensation incentives on the business performance of family firms during the intergenerational succession period.Manual collection and screening were conducted to obtain 132 Chinese listed family firms that completed intergenerational succession between 2010 and 2016,and use these samples for research.Firstly,obtained the family business performance index based on the principal component analysis method to reflect the comprehensive operation of the family business under this stage.Secondly,examined the impact of executive equity incentives and compensation incentives on the business performance of family businesses under the context of intergenerational succession.Thirdly,explored the mediating role of agency costs from perspective of agency fees and agency efficiency.Fourthly,a new sample enterprise group is obtained by adjusting the actual controller's control ratio and use the new sample to test the hypothesis again,also using the Bootstrap method to retest the mediation effect,in order to test the robustness of regression results.Finally,in further research,explored the interaction between equity incentives and compensation incentives through group regression.The results show that: Firstly,under the intergenerational succession situation,the executive equity incentives have an inverted U-shaped effect on the family business performance.Secondly,the executive compensation incentives in this period have a positive impact on the business performance of the family firms.Thirdly,agency costs play a mediating role in the above relationship,that is,during the intergenerational succession period,the path of “executive equity/salary incentives – agency fees/efficiency – family business performance” is established,clarified the internal mechanism of executive incentives affecting corporate performance.Fourthly,executive equity incentives can amplify the incentive effect of executive compensation incentive.Fifthly,the effects of executive incentives are much better if family firms have a high degree separation on control and ownership.Besides,for family firms with a high degree of separation of powers,the effect of executive compensation incentives is better,and for family firms with a low degree of separation of powers,the effect of executive equity incentives is better.Therefore,family firms should select correct executive incentives according to actual operation conditions.This article includes five chapters.The first chapter is the introduction,expounds the research background and significance,reviews the relevant research results at home and abroad,combs the research content,and summarizes the innovations.The second chapter defines the basic concepts involved in the research and explains the relevant theoretical foundations.The third chapter is the research design,puts forward the hypothesis of this paper,selects the variables needed for research and explains them,and builds models by referring to the causal step test method.The fourth chapter is an empirical study,obtains the family business performance index based on the principal component analysis method,completes descriptive statistics,regression analysis,robustness test and further research,and proposes relevant policy suggestion based on the conclusions.The fifth chapter is the conclusion,summarize the research results and look forward to future research.