An Empirical Study of the Effects of Corporate Performance on Managerial Compensation Based on China's Listed Companies

摘要

With the basic completion of non-tradable shares reform and the enhancement of privatization reform in China's listed companies, the importance of managerial compensation towards corporate development has increased significantly. To connect corporate performance and managerial compensation is an important method to solve the agency problem. Not alike most literature in China, this paper pays close attention to the influence of corporate performance (including market performance and financial performance) on managerial compensation. The paper examines data of China's listed companies during year 2004-2008 and use regression model to conduct empirical analysis. The result shows that the correlation between managerial compensation and corporate performance is not obvious enough; the sensitivity of managerial compensation to performance is not very strong. In addition, this paper also examines the influence of the final controller attribute on "performance-compensation relationship"; the result shows that in private controlled listed companies, the effects of performance on compensation are not significantly better than that in other type of companies.