Abstract: Based on the three-tire agency framework of“entrusting-supervising-agency”, and from the perspective of whether the chairman of the board receiving salary in the listed company, this paper studies the impact of salary arrangement of chairman of the board in state-owned enterprises on the salary incentive for the top management in listed companies based on the present situation of the chairman of the board of directors holding vertical dual positions that widely exists in the state-owned enterprises. The findings show that the chairman of the board receiving salary from the listed companies can enhance the salary-performance sensibility of the top management, having a supervising effect. The chairman of the board receiving salary from the listed companies will enhance the salary-company scale sensibility of the top management, having a collusion effect. The chairman of the board receiving compensation from the listed company will significantly lower the corporate value, the collusion effect is better than the supervision effect. The findings of further study show that the supervision effect will reduce the level of corporate earnings management, while the collusion effect will result in over-investment and over-debt.

Key words: dual appointment, compensation arrangement, collusion effect, supervision effect