The Study On Firm Performance And Compensation Dispersion Of Chinese Listed Stated-owned Companies

Since the1980s, the remuneration of senior executives has begun to attract great concern in domestic and foreign academia and practice, which explore mainly the relationship between pay and firm performance of the executives,In comparison, the design of remuneration for the enterprise may be more important (Jensen and Muphy,1990), because it directly affects the morale of the employees, thereby affecting corporate performance. A very important part of the remuneration structure design is the business vertical and horizontal level of the pay gap between design, including the gap between the pay among corporate executives and senior executives and ordinary employees. Western scholars explain the formation of two more representative view on the relationship between executive pay gap and business performance from a different perspective: tournament theory and behavioral theory. Tournament theory is that the pay gap is an additional incentive to the winner in the race, which emphasizes that the greater the pay gap and more competition prize to promote internal competition of the executives and thus enhance the performance of the enterprise, while behavioral theory, which focuses more on fair, means that smaller pay gap and less competition prize can promote cooperation among the team so as to enhance corporate performance. According to the optimal contract theory, executive compensation as a solution to the principal-agent problem can motivate corporate executives to maximize enterprise value to make every effort to work through the establishment of an effective salary structure. However, in the21st century, U.S. yielded several major financial fraud cases violate the optimal contract theory, so the two scholars of Rebchuk and Fried propose the power management theory on this basis. It considers, executives have the ability to custom pay because of the failure of external oversight mechanisms as well as the omission of the board members. Based on management’s rights perspective on the relevant aspects of executive compensation and corporate performance it has also become the focus of attention by the Chinese and foreign scholars in recent years, and management of power theory can explain corporate executive pay as the main basis of the pay gap.Chinese traditional culture stresses that "harmony is most precious" and the pursuit of fairness, which departure from the pursuit of material interests in the market economy. Under the influence of tough "iron rice bowl" and "iron rice bowl", China’s state-owned enterprises in the period of economic transition China has not completely gotten rid of the salary to develop the traditional egalitarian philosophy. And State-owned holding the dominant position of state-owned listed companies often lead to the absence of owners, so that state-owned enterprises whose control is transferred to the management. The extensive literature studies have shown that there are more serious control over the administrative configuration and internal control problems in China’s state-owned enterprises. In the transition to market economies, new incentive compensation system in the state-owned enterprises has not been perfect, the most senior executives of state-owned enterprises pay to take the enterprise of self-reported, the SAC review the record in this way, which would have led to the remuneration of the management of state-owned enterprises program and business performance out of line.In China, the traditional culture emphasized equity, this goes against the pursuit of material interests in the market economy, but Chinese state-owned enterprises is in the period of economic transition,under the influence of the "big pot" and the "iron rice bowl" in the past, these enterprises has not completely get rid of the traditional egalitarian philosophy. Because State-owned holding hold the dominant position in the state-owned listed company, it often leads to the absence of owners, and make the real control power is transferred to the management of state-owned companies. A lot of literature shows that there are serious control administrative configuration and internal control issues of Chinese state-owned enterprises. In the transition of market economy, new incentive compensation system in the state-owned enterprises has not been perfect, most of the Executive compensation of Chinese state-owned enterprises is Enterprises self-reported and The SASAC audit, these manners will Result in the remuneration packages of the management of state-owned enterprises out of touch with business performance. So, executives of state-owned enterprises are more likely to use their power to formulate salary themselves.Research purposes of this paper are as follows:(1) to examine the applicability of Championships theory and behavioral theory for executive team and employees in Chinese listed state-owned enterprises, to provide the relevant empirical data for Remuneration development to Chinese state-owned enterprises.(2) To test the impact of Chinese state-owned enterprise management power on the incentive effects of pay gap for Executive team and employees, to provide a preliminary empirical data for research in the field.This paper was divided into six chapters, including the introduction, the theoretical basis, the institutional background analysis, theoretical analysis, the empirical analysis and conclusions and recommendations. the specific arrangements are as follows:Chapter1, Introduction. Introduce the background and significance of this study and research purposes, the basic ideas, research methods and the basic framework, the main concepts defined and the expected contribution of this paper.Chapter2, Literature review. This chapter reviews the current literature on the pay gap (tournament theory and behavior theory), as well as management of power.Chapter3, The institutional background analysis of Chinese state-owned enterprises. This chapter first describes the provisions of the pay gap for Chinese state-owned enterprises, Combined with the management powers of the state-owned enterprises in China, and Analyzed the status quo of the power of the management of state-owned enterprises in China.Chapter4, The theoretical analysis. This chapter first introduces the pay gap theory and management power theory, Combined with the institutional background of the previous chapter, analyzed the applicability of the pay gap theory and management power theory in Chinese listed state-owned enterprises.Chapter5, The empirical analysis. Combined with the theory of the previous section, we give the assumptions of this paper, made an empirical test of previously assumptions, and made the descriptive statistics and regression analysis.Chapter6, Conclusions and recommendations. First summarize the conclusions of this study, then combined with the paper puts forward some policy recommendations, finally, suggested the future research direction.This article expected contribution:(1) Combined with a special system environment and governance structure of state-owned enterprises, this paper Examine the impact of corporate system on tournament incentive effects;(2) in the process of define the pay gap between the executive team and staff, Includes not only the dominant currency of the pay gap, Also collected on-the-job consumption gap by hand, response to the connotation of the pay gap more comprehensive;(3) Not only verify the impact of the management powers on the executive team pay gap, Also verified the impact of management powers between the executive team and staff of the pay gap.The results of this study are as follows:(1) the recent years the pay gap between China’s listed state-owned enterprises within the executive team and senior management team and staff of the tournament theory, that is, the pay gap with the company performance, has a significant positive correlation.(2) the management powers of the executive team within the pay gap has a significant positive impact, while the effect on the pay gap between senior management team and employees, but not significant, which may indicate that the management of state-owned enterprises influenced by external political factors, they may fear the impact of the relationship between cadres, not with the workers the pay gap is too large.(3) to a certain extent, the management of power within the executive team as well as the pay gap between senior management team and employees have a tournament incentive effects. The greater the management of power, The greater the pay gap, the better the performance of the company indicates which means the gradual improvement of governance mechanisms of listed state-owned enterprises to develop a more market-based pay incentives with the transformation of China’s state-owned enterprises.Departure from the conclusions, this paper has the following recommendations:(1) reasonable arrangements for the pay gap between different levels of state-owned enterprises, stimulation the enthusiasm of the executive team and staff can make staff spare more effort for the performance of the enterprise, we should combine with the specific environment to make an appropriate pay gap to avoid the corporate members a sense of injustice, strengthen teamwork between corporate members, and to prompt the executive team and staff worked together to increase business performance;(2) further disclosure norms to improve the salaries of state-owned enterprises, to increase the salary transparency, we need not only to listed state-owned enterprises to disclose the total remuneration of senior executives, but also require detailed disclosure of executive compensation and the composition of executive pay to develop basis, China’s state-owned enterprises the pay system more robust and more transparent, in order to reduce the pressure of public opinion as well as the staffs sense of injustice.(3) to strengthen the management of senior executives of state-owned enterprises-the-job consumption, we should fully learn the advanced management practices in Western countries, clear that the enterprise of the official cost of consumer standards and different levels of executives can enjoy the treatment, through the development of the corresponding the provisions of its institutionalization, and in strict accordance with the standards. At the same time, executives in each quarterly and annual service consumer standard implementation of state-owned enterprise board of directors, board of supervisors or workers’representative report to the General Assembly, so that shareholders and employees fully understand the service consumption, it is more transparent state, assessment and supervision of state-owned asset management department.(4) To strengthen the external oversight of the state-owned enterprises pay system, and strengthen the external oversight of the public, news media, the market intermediaries in China’s listed state-owned enterprises pay system, and increased transparency through the continuous strengthening of the external oversight to lure corporate salary information disclosed.Future research directions:(1) In this paper the measurement of on-the-job consumption is a more reasonable way, and future research can have a more reasonable way to measure its amount;(2) with equity incentives in China’s listed state-owned enterprises generally carried out, the amount of incentive stock options should be consider in the measurement of the amount of executive pay;(3) a separate study of-the-job consumption listed on the performance of state-owned enterprises in China;(4) the management authority to the theoretical study of the governance mechanisms of the state-owned enterprises can be study.