Research On The Influence Of Pay Gap In The Top Management Team On Company Performance

CEO pay of Listed Companies has always been an important area of corporate governance, based on principal-agent theory, in order to ensure the interests of consistency between the company's shareholders and the operators, choosing the performance level of executive pay as the main determinant can most cause executives attention of the company's business conditions. But if all executive pay go along with the proportional positive changes in company performance without taking the contribution of individual executives into account,it is not an effective incentive mechanism to achieve, It also can not effectively stimulate the enthusiasm of each executive within the executive team. A reasonable incentive mechanism will produce the pay gap within the team, does it affect the performance of the company,this is a problem worthy of study. To solve the problem has far-reaching significance of deepening the reform of executive pay incentive system and improving the modern corporate governance system. Through the theory of executive pay gap within the team,analizing the current situation of the CEO pay gap within the team impacting on performance in manufacturing sector deeply, putting forward countermeasures and suggestions,to provide reference ideas on the CEO pay system design.This paper is organized as follows, the first introduction part introduces the research background, significance, research ideas and methods, summarizing the main point view of research scholars. The second part is divided into theoretical and analysis section, firstly elaborating the two described theory of the pay gap--game theory and behavioral theory; followed by the relevant concepts of the pay gap; again, conducting a descriptive statistics on the executive pay gap within the team in manufacturing listed companies from 2006 to 2008,sorting out the current situation of the impact that the pay gap within the executive team on performance. The third part is the empirical analysis section, with the latest sample data and indicators, to construct multiple linear regression model, using SPSS statistical software for the correlation. Empirical findings show that executive pay gap within the team and company performance are significantly positively correlated, while presenting range effect.The fourth part is against the above-mentioned theoretical and empirical analysis, putting forward general conclusions and policy recommendations reasonablly, and finally prospecting the future research.The innovative and feature lies in,with the much attention paied to CEO pay, based on executive pay gap within the team's perspective, with 2006-2008 financial data in China Listed Companies from Shanghai and Shenzhen A share market,giving a more systematic statistical description for current status of impact that executive pay gap within the team's on the performance; after by linear regression analysis,to see the pay gap in senior management team of China listed companies has the range effects with the performance of the company. This study will help developing executive compensation policies and corporate governance structure, which has a practical reference value.