A Study On The Superstar Effect Of The Executive Pay

In recent years, the higher pay of executive pay concentrates people's attention on it and has become a new hot spot. People give discussion on how much do executives should pay in China for their decisive role in company. But existing domestic and overseas studies focused on the relevance between executive compensation and company performance, strong or weak in the intern corporate governance, the relation between compensation dispersion and company performance. They find big relevance between executive compensation and company performance in term of accountant report and stock benefit in countries. The power of executive should be restrained if their company has strong corporate governance for a proper executive pay grows. Compensation dispersion could incite competition; also destroy teamwork, so its effect on performance is uncertain. Some papers consider compensation benchmarking management and the behavior of executive's rent-extraction has surged their high pay. But existing studies lack deep research on the executive status, especially to the influence of the status to their own pay. We could see clearly how important is the status for the executive pay grows from the theory of the superstar effect. Yet it also riches the theory of the executive pay and gives good explanations for the surge of the executive pay.This text which shows theory of Winner Takes All and Superstar Effect, considers the professional manager market is a winner takes all market. And in this market, good manager could become advanced supervisors in the company through fair competition. The position of executive gives superstar effect to the executive as a sign for the pay grows. Once succeed to the top position as a winner, their pay would be the highest in the professional manager market, no matter whether they bring good performance to the company. Like the superstar own the most resources and get the highest reward, the power and the status of the CEO position decides how much higher they get. Especially in the state-owned business, its top executive is the person who operate and manage company, but also the government official. It is unfair for their high reward only due to their status. Because the state-owned businesses enjoy market dominance, the executive's operation and management ability does not explain good performance. This text tried to analyze the role of the status and power of the executive for their pay grows. We know top executives play a decisive role in their company and the executive of the state-owned business is a particular group. The Winner Takes All professional manager market could increase the efficiency of process of executive selection and has great influence to the executive pay which has superstar effect for executive pay. Finally we give some political suggestions for the whole essay.This dissertation falls into five sections. The first chapter is the introduction. It provides general background information, the reasons of choosing this topic, and practical significance of this topic. It defines several basic concepts related to the main topic of the dissertation, such as the executive, the executive pay, and also explains the analytical methods, the layouts of the content. The second chapter describes the relative theories and document summarize, provides theories of Winner Takes All and Superstar Effect, and also illustrates an overview of the domestic and overseas scholars' researches on the grows of the executive pay. The third chapter describes the character, the specificity, the overall confidence of the executive. These are the basis of superstar effect for the executive pay. The fourth part comes to the executive pay of the superstar effect. It shows the situation of professional manager market; discuss the influence of the superstar effect for the company's selection of the executive in the marketical professional market and the influence of pay grows for the executive status. The last part comes to the political suggestion for the whole essay.