A Study On Contributing Factors On Compensation Difference Between Lower-level Employees And Top Management And Relationship Of Compensation Difference And Firm Performance

Following China’s market economy, equalitarianism has been weakened in China’s society, so compensation difference between top management team and employees except top executives has been enlarged and the public society began to focus on this phenomenon. However, it is a pity that existing studies paid more attention to compensation of executives and top management team’s pay difference, and seldom focused on compensation difference between top management team and employees except top executives. Because we know so little about this field that compensation difference setting of companies has been trapped in blind state. In addition, in China’s companies especially stated-owned companies, non-monetary compensation, for example perquisite consumption, take an important role in compensation system. But existing empirical studies on compensation difference have almost neglected non-monetary compensation difference. Because of these, using china’s listed companies as sample and selecting2006to2009as our research period, this paper try to explain the contributing factors on monetary compensation difference and on-monetary compensation difference between top management team and employees respectively. At the same time, this paper studies the effect of monetary compensation difference and on-monetary compensation difference on the firm performance in order to provide relevant empirical research basis for listed companies.According to the Empirical studies, we find that perquisite consumption,c orporate governance mechanism, firm size, concentration of ownership structure,capital structure,managers power and firm performance have significant effect on monetary compensation difference. In addition, the empirical results show that monetary compensation difference between top management and employees has significant positive on firm performance. Based on the empirical results, we also find that betweem private compies and stated-owned companies, the relation between compensation difference and firm performance display significant differences. It is also indicated that appropriate perquisite consumption has positive effect on firm performance in private companies, and in state-owned companies the relationship between perquisite comsumption is opposite. In addition the empirical results also demonstrate that monetary compensation difference restrain negative effect which perquisite comsumption has on firm performance.