Research On The Influence Of Private Equity Investment On The Stickiness Of Executive Compensation

Over the recent years,the salary of senior executive from listed companies frequently becomes the focus of most of people.The same time all sectors of society draw attention on the incident about sky-high salary of senior executives,they put forward their doubt on the reasonability of the senior executives' salary.In reality,basic salary and performance salary are the main components of executives 'monetary compensation.The performance salary accounts for half or above of the total salary and it depends on the contribution from the executives to the company.An effective salary incentive mechanism should reflect the change of enterprise performance.However,as a research discovers,there is a phenomenon of "Stickiness" between executive compensation and corporate performance.When the company performance declines,the executive performance salary does not decrease synchronously or the decrease is significantly lower than the increase of executive compensation when performance increases.From another perspective,the stickiness phenomenon of "Rewarding the good without punishing the bad" shows that the executive performance salary mechanism of listed companies can not effectively reduce the agency cost of enterprises,but instead it becomes part of the agency problem.At present,domestic learners have no systematic research on the stickiness of executive salary and prefer to carry out research on the stickiness of executive compensation from the perspective of corporate internal governance.This paper makes analysis on the stickiness of executive compensation of listed companies from the perspective of private equity investment crossing from the perspective of external influencing factors.This paper takes 2010-2017 data from listed companies in Growth Enterprises Market in China as research sample.At first,the relevant theories and research contents are sorted out by referring to relevant materials.Then this paper makes an introduction to the theoretical basis of the influence of private equity investment on the stickiness of executive compensation,and expounds how private equity investment and its characteristic factors affect executive compensation.Next,taking executive compensation as the explained variable,taking four characteristic factors as the explanatory variables,including whether there is private equity investment support and the shareholding ratio of private equity investment,state-ownedbackground,joint investment and duration in the enterprise,the model is established for regression analysis.Finally the conclusion is worked out: the stickiness of executive compensation is widely existed in Growth Enterprises Market listed companies in China.The support of private equity investment has a significant inhibitory effect on stickiness of executive compensation in Growth Enterprises Market listed companies.The influence of the background of private equity investment and the duration of private equity investment in enterprises is not significant on the stickiness of executive compensation.According to the conclusion above,from the perspective of the invested enterprise and private equity investments this paper puts forward specific suggestions on reducing the stickiness of executive compensation.The invested companies shall actively play the synergistic role of private equity investment while further improving the internal governance structure.The private equity investment organizations shall continuously improve their ability to participate in enterprise management,increase the relative shareholding ratio,and assist enterprises to establish a scientific and long-term compensation incentive mechanism.