The Impact Of Executive Salary Stickiness On The Company’s Future Performance

Since the 21 st century,the executive compensation of Listed Companies in China has become the focus of government supervision and public opinion.The reason lies in whether the performance-based executive compensation assessment mechanism can be effectively implemented.At present,most scholars at home and abroad believe that the performance sensitivity of executive compensation exists,and after in-depth study of the symmetry of the performance sensitivity of executive compensation,we come to the conclusion that there is stickiness in executive compensation.Most of the research on this conclusion in our country is focused on before 2015,and the relevant policies and social environment changes issued by the government after 2015 may lead to this conclusion cannot be verified.At the same time,there are few researches on the rationality of executive pay stickiness and how it affects the future performance of listed companies.Therefore,this paper takes 2015-2018 as the time period,and all A-share listed companies in China as the research object,to explore whether there is still this kind of executive pay stickiness in China’s Listed Companies in the new era,and take its impact on the future performance of the company as a reasonable judgment,to explore the rationality of the existence of executive pay stickiness,in order to bring some reference to the theory and reality.First of all,this paper introduces the background and significance of the research,and defines the important concepts.Then on this basis,it combs out the research methods and framework of the paper,and puts forward the innovation of this paper.Secondly,it discusses the related literature at home and abroad in detail,and puts forward research hypotheses based on principal-agent theory,optimal contract theory and management power theory.Then,the paper selects all A-share listed companies in Shanghai and Shenzhen stock markets from 2015 to 2018 as the research samples and builds the model,combining with descriptive statistical analysis and regression analysis to make empirical analysis.In the selection of indicators,this paper will be ignored in the past implicit compensation into the executive compensation,select the net profit excluding non recurring profit and loss as performance variables,and use the company’s performance in the second year as the company’s future performance indicators.In the part of empirical analysis,this paper starts with the verification of the viscosity of executive pay in listed companies,and on the basis of the verification that there are still viscous characteristics of executive pay in listed companies,focuses on the correlation between the viscosity of executive pay and the future performance of the company.The empirical results show that there is no significant correlation between executive pay stickiness and future performance.Finally,in order to further explore the relationship between executive pay stickiness and the future performance of the company,according to the nature of equity,all A-share listed companies are divided into state-owned listed companies and non-state-owned listed companies,and then verify the impact of executive pay stickiness on the company’s future performance.Through the empirical test,we can draw the following conclusions: first,since entering the new era,there is still stickiness in the executive compensation of Listed Companies in China,that is,the increase of executive compensation when the performance of listed companies increases by one unit is greater than the decrease of executive compensation when the performance decreases by one unit.Secondly,the existence of A-share listed companies’ executive pay stickiness has no significant impact on the company’s future performance.Thirdly,after all A-share listed companies are divided into state-owned listed companies and non-state-owned listed companies according to the nature of equity,it is found that executive pay stickiness of non-stateowned listed companies has a positive impact on the company’s performance in the next year,but this impact does not exist in the state-owned listed companies.Fourth,the salary of the senior executives of Listed Companies in China has a positive impact on the performance of the company in the next year.Fifth,the stickiness of executive compensation of state-owned listed companies is significantly greater than that of nonstate-owned listed companies.According to the conclusion of the above empirical research,this paper holds that: on the one hand,we should improve the performance evaluation system,and adopt the dual track mechanism of reward and punishment,so that the interests of the company’s management are closely related to the interests of the company.On the other hand,in the state-owned listed companies,we should speed up the market-oriented reform of the salary system of commercial state-owned enterprises,encourage the design of contract mechanism with salary stickiness in the non-state-owned listed companies,and join the design of salary incentive system with asymmetric characteristics of "heavy reward,light punishment" and "good reward,no punishment for bad",so as to enhance the enterprise value.