Research on Executive Compensation and Free Cash Flow Based on Data of Listed Companies

The article is an empirical research based on the data of the listed company from Shanghai and Shenzhen stock market. It uses the data from the financial statements which are disclosed by listed company. We find that the executive compensation has a positive correlation with the free cash flow. Besides that, the executive compensation is negatively related with company-paid compensation. We conclude that there is a positive correlation between the free cash flow and the size of board of directors. After that, the paper verifies the relationship between FCF and CPC for analyzing the executive compensation precisely. We find that free cash flow is positively associated with company-paid consumption, which accounts for the agency cost.