Li, Muzi
(2020)
An Empirical Analysis of the Impact of Corporate Governance on Executives Compensation in State-owned Listed Enterprises in China.
[Dissertation (University of Nottingham only)]
Abstract
Among the various agency relationships within the company organization, the senior executives of the companies are the main decision makers. The
performance of the company, the development prospect of the company
and the realization of the interests of the shareholders of the company are
all related to the selection and decision-making of the senior executives to a
great extent. Therefore, the agency relationship between the shareholders
and the senior executives of the enterprises undoubtedly has a prominent
and important position. Through the reasonable corporate governance
structure to improve the efficiency of salary arrangements, of course, has
been the concern of around the world. If the corporate governance is
reasonable, it can ease the agency problem of shareholders and managers
caused by the separation of ownership and management rights. Besides, it
could also reduce the cost of agency by keeping the interests of managers
and shareholders more consistent. The purpose of this research is to verify the impact of corporate governance
on senior executives compensation in Chinese state-owned enterprises
through empirical analysis. Based on the review of relevant theory and
literature, this paper takes A-share state-owned listed companies in
Shenzhen and Shanghai stock exchanges as samples, collects relevant data
from CSMAR database, and uses descriptive statistics and multiple linear
regression methods. After that, this paper analyzes the impact of corporate
governance structure on executive compensation in state-owned
enterprises, and provides suggestions for improving the effectiveness of
corporate governance, as well as some reform measures of executive
compensation. The results of regression reveal that in the sample companies, executive
compensation is positively correlated with the size of the board of directors, the duality of CEO and the proportion of executives' shareholding. Besides, the relationship between executive compensation and ownership
concentration and the proportion of independent directors on the board is
not significant. Furthermore, this paper analyzes the above regression
results, combined with the status of the corporate governance structure and
executive pay in Chinese state-owned listed companies. Finally, the paper
offers the following suggestions on the improvement of corporate
governance structure and the standardization of executive compensation in
Chinese state-owned enterprises.
3
1.Establish the appropriate board size. 2.Eliminate the duality of CEO. 3.Combine executive compensation with long-term performance of the
company, and develop equity incentive supporting policies. 4.Improve the supervision and evaluation mechanism of non-executive
directors, build the accountability system of non-executive directors, and
link the remuneration of non-executive directors with firm performance. 5. Form multiple equity identities and clarify the subject of property rights.
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