Salary of Top Executives, Supervision Power and Private Benefits of Control:the Outcome of Salary Limiting
WU Chun-lei 1， MA Lin-mei 2
(1. School of Business Administration, Liaoning Technical University，Huludao 125105, China|2. Graduate School, Chinese Academy of Social Sciences，Beijing 102488, China)
Abstract Using mathematic models, the authors made a theoretical analysis of the outcome of reducing the salary of top executives in different supervision powers. The research finds that in the process of enterprises’ sustainable operation, reducing the salary of top executives may lead to the substitution of private benefits of control for salary, which will result in negative incentive effect. The higher the supervision power, the more obvious the negative incentive effect|the supervision power is the critical factor to determine the substitution level. Unchanged or weakened supervision power may strengthen substitution of private benefits of control for salary. The research results suggest that no matter how the supervision power changes before and after salary reduction, the salary limiting policy may be a failure. It is suggested that the supervision on top executives should be strengthened greatly while their salary is restricted in the countries like China which have issued the salary limiting decree
TUN Chun-Lei-,MA Lin-Mei-. Salary of Top Executives, Supervision Power and Private Benefits of Control:the Outcome of Salary Limiting. Economic Survey, 2011, 28(4): 0141.
2011, Vol. 28 
