An Empirical Study On The Impact Of Controlling Shareholders' Stock Pledge On Executive Compensation Performance Sensitivity

Since 2013,stock pledge for financing has developed rapidly in China,which provides a new financing channel for shareholders without changing control rights,but also poses risks.According to the principal-agent theory and the optimal contract theory,linking executive compensation with the company's performance,that is,improving the sensitivity of executive compensation performance,can make the interests of executives and shareholders tend to be consistent,and encourage executives to make conducive decisions.Based on the principal-agent theory,the optimal contract theory and the hypothesis of the justifying compensation,this paper takes listed companies in China as a sample to study the compensation performance sensitivity,and discusses that the pledge of the company's shares by controlling shareholders may cause damaging impact on governance of this company.Also,this article considers the impact of different property nature or ownership concentration.The results show that:(1)With the continuous improvement of the executive compensation system of listed companies in China,executive compensation strongly correlates with corporate performance;(2)The stock pledge of the controlling shareholders has a negative impact on the sensitivity of executive compensation performance,distorting the original compensation contract;(3)When the enterprise is state-owned or the ownership concentration of the enterprise is high,there is no significant correlation between the controlling shareholder's stock pledge and the executive compensation performance sensitivity,but in non-state-owned enterprises or the company's ownership concentration is low,there is a significant negative correlation between the two.Finally,relevant policy recommendations are given.