Dissertation > Economic > Fiscal, monetary > Finance, banking > China's financial,banking > Financial market

The Research of the Relationship between the Senior Executive Payment and the Firm Performance in China

Author YinShuoZuo
Tutor XingTianCai
School Dongbei University of Finance
Course Finance
Keywords The senior executive payment Firm performance Influencing factor
CLC F832.51
Type Master's thesis
Year 2011
Downloads 168
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In recent years, the research of corporate governance has formed a global wave. A reasonable corporate governance mechanism is important. Firstly, it is to provide the necessary condition for the company’s operation and development. Secondly, it is to reduce the agency cost of enterprises and maximize the value of the company. So the salary system becomes important.Based on the related literatures at home and abroad, this paper includes three parts. Firstly, the executive payment is related with the firm performance. Secondly, the executive payment is not related with the firm performance. Thirdly, there are other Influence factors.The theoretical basis of this paper includes Principal-agent Theory, Optimal Contract Theory and Manager Theory. Part 4 presents the current situation of top executive compensation in Chinese listed corporations.On the basis of previous research and theories, this paper presumes and examines the relationship between compensation of senior executives and the firm performance in Chinese listed firms. This paper also made a research of the Influence factors. This paper finds that the accounting performance index is better than the marketing performance index. The empirical study suggests that executive payment is positively correlated with the performance of company (measured by financial ratios). Company size has a positive effect on executive payment. Operating ratios is positive associated with operating ratios, which is measured by receivable turnover. The share holding of the first majority shareholder is negatively correlated with executive payment, which can be implied that ownership concentration plays a role executive payment. If the positions of chairman and general manager are charged by the same person, the absolute value of executive payment will be improved significantly. Company industry is positively associated with executive payment. The difference of executive payment is correlated with the company profit, competitiveness level and regulations among different industries.The last part of the article concludes and gives some suggestions. The publicly listed firms need to improve incentive mechanism in China. They should gradually increase the role of share incentives. At the same time, we can further promote the diversity and efficiency of incentive mechanism by nurturing healthy manager market and capital market. Last but not least, we should build a sound restraint mechanism and improve relevant laws and regulations. Thus the formation of a modem salary system can be insured in China.

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