Abstract: In this paper, we use the data of Chinese listed companies from 2006 to 2013 to examine the difference of executive compensation incentive effect in three categories of state-owned enterprises. We find that the executive compensations have positive effect on firm performance in competitive state-owned companies, but have no effect in the other two types. Furthermore, we find the effect is greater in competitive state-owned companies, compared with the non state-owned listed companies. Also, we find that in the competitive state-owned listed companies, as the power of government control increases, the executive compensation incentive effect is weakened. Therefore, in order to enhance the effectiveness of executive compensation incentive in state-owned enterprises, the government should loosen the control over competitive state-owned companies gradually. Unlike the existing researches, this paper highlights the differences of executive compensation incentive between different types of state-owned enterprise. In the new stage of classified reform of Chinese state-owned enterprises, this research has certain theoretical and practical significance.

Key words: classification of state-owned enterprises, government control, executive compensation, incentive effect