Correlation Research of Executive Remuneration and Company Performance in China’s Listed Companies.doc

Correlation Research of Executive Remuneration and Company Performance in China’s Listed Companies 　　（School of Accounting, Xinjiang University of Finance and Economics, China, Xinjiang, Urumqi, 830012） Abstract. With the occurrence of agent problems, the remuneration of managers in listed companies has always been attracting much attention. Social audiences’ doubts on the high remuneration of some individual executives are on the rise. The key of the problem lies in the fact if the remuneration of senior executives is in accordance with the company performance. In this paper, the correlation between the executive remuneration and company performance from 2010 to 2012 is studied with A-share listed company as a sample. The correlation differences in the executive remuneration and company performance between the state-owned enterprises and private enterprise, as well as the correlation differences in the executive remuneration and company performance between the listed companies in the eastern region, central region and western region in China. It has been discovered in the study that there is a positive correlation between the executive remuneration and company performance in listed companies, namely the better the company performance is, the higher the executive remuneration will be. When compared to the state-owned listed companies, the correlation between the executive remuneration and performance of private listed enterprises is much more evident. When the eastern and central region is compared to the western region, the correlation weakens gradually. Key words: executive remuneration, company performance, state-owned enterprise, private enterprise. Owing to the existing of agent problems, owners and managers should set up a profit connection mechanism for their profit deviation through the remuneration contract. Therefore, the sensitivity of remuneration and performance turns to be a significant index for balancing the effectiveness of remuneration co