Ultimate Owners'Trust and the Level of Executive Compensation
The ultimate owner's trust in the executive team is a key influencing factor on the level of executive compensation,and this trust significantly increases the level of executive compensation.The underlying mechanism is that the ultimate owner appoints capable"acquaintances"executives to achieve mutual risk sharing and incentive compatibility,that is"rewarding relatives with talents".The test results excluded potential explanatory pathways such as collusion motives of the ultimate owner.Further analysis shows that the trust of ultimate owners plays a positive role in the governance of agency costs through executive compensation incentives,that is,it optimizes the governance effectiveness of compensation incentives as a collaborative mechanism.The above conclusion not only theoretically demonstrates the role of ultimate owner's trust in optimizing the effectiveness of executive compensation contracts,providing the possibility to ease the divergence between optimal contract theory and management power theory,but also reveals that trust is an effective solution to the problem of information asymmetry in China's institutional context,providing a Chinese context answer for market-oriented pricing of entrepreneurial factors.
ultimate owner's trustexecutive compensation incentiveagency costrelational contract theory
万方数据
维普
