Business Complexity, The Gap Between Executive Pay And Corporate Performance

Studies have found that the top executive pay gap of the Chinese listed companies meets the tournament theory in general, that is the pay gap is conducive to enhancing business performance. Choosing the the Chinese A-share listed companies from the year 2005 to 2009 as the research sample, this paper introduce a variable of operating complexity, in order to analyze the relationship of operating complexity, the top executive pay gap and corporate performance. Empirical studies have shown that the operating complexity affects the top executive pay gap to some extent. In all cases, the more complex a company is, the smaller the pay gap. The business complexity has significant negative correlation with the relative top executive pay gap. When defining the operating complexity by whether a company has overseas revenue, the business complexity has significant influence on the correlation between the top executive pay gap and corporate performance. However, when defining the operating complexity by the size of companies, the operating complexity has little influence on the relationship between the top executive pay gap and corporate performance.