Study On External Unfairness Of Compensation And Inefficient Investment

Serious inefficient investment behaviors exist in China’s listed companies. Managers are the main decision-makers to configure company’s resources. Compensation contract is an important incentive mechanism to solve the problem of agency problems between managers and shareholders. In recent years, managerial compensation rise, but did not form an effective constraint and incentive for managers. With the extensive development of behavioral finance theory and experimental economics, a large number of game studies have proved that human nature is pursuing the sense of fairness. The standard compensation contract is based on the assumption of "rational economic man", which ignores the influence of the subjective psychological perception of the managers on the contracting results and the efficiency of corporate governance in the process of contract design. In addition, the fact that can’t be ignored is that listing Corporation managerial compensation serious polarization, some managerial compensation even in the middle and lower levels of social income distribution, managerial compensation fairness problem is very grim. Based on realistic background of investment inefficiency and managerial compensation gap significantly existing, introduce the envy theory into the framework of compensation contracts, investigate of the external compensation unfairness how affect managers psychological perception and the managerial investment behavior choice.Based on the comparison theory, fairness theory, exploitation theory, reciprocity theory, high order management theory, institution economics theory, the paper first analysis the relationship of external managerial compensation unfairness and the envy psychology, focuses on the cognitive mechanism of managerial envy, the emotional mechanism of managerial envy, the behavior mechanism of managerial envy; then, the paper analysis the influence of managerial white envy and black envy exert on inefficient investment; the paper analysis adjustment mechanism of managerial individual characteristics and institution environment characteristics exert on managerial envy. The paper analysis the institutional background, such as Chinese "fairness and efficiency" of the thought and policy changes; the development and evolution of the analysis of China’s listed company manager salary system and our country listed company manager power. Above all, the paper puts forward the analysis framework of external managerial compensation unfairness and inefficiency from the perspective of envy. Then from two angles of normative and empirical, using multiple linear regression method and adjusting variable analysis method, the paper analysis the influence external managerial compensation unfairness exerts on inefficiency investment, the adjustment of individual managerial characteristics and institutional environment characteristic on the relationship of above. The study found:(I) The higher the degree of the external unfairness of managerial compensation, the more serious the inefficiency investment behavior taking. The result shows that the external unfairness of managerial compensation will lead to black envy, and the manager will seek to compensate for the Loss of sensation.(II) Managerial external background characteristics, such as age, gender significantly alleviated managerial black envy of compensation comparison, degree not has any effect of managerial black envy of compensation comparison, tenure significantly increased managerial black envy of compensation comparison. Managerial internal background characteristics, such as excessive confidence enhance the black envy of compensation comparison, optimism weakened managerial black envy of compensation comparison.(III) Compared to the state-owned enterprise, managerial black envy of non state-owned company is more stronger; managerial black envy weaker with marketization process developed; recession macroeconomic environment exacerbated managerial black envy; finally, regional living standards alleviated managerial black envy of compensation comparison.Based on the above research, in order to improve the investment efficiency of Listed Companies in China and achieve social resources allocation Pareto improved, the paper put forward the policy recommendations that the listed companies should create optimal contract theory for the environment, promote managerial black envy to white envy jealousy transformation; the government should continue to improve the managerial compensation regulation mechanism, reduce external compensation unfairness; encourage listed companies to establish the managerial compensation policy and employment system associated with the individual characteristics.