| Principal-agent is an inevitable product with the development of socialization, whichis also a sign of social progress. However, adverse selection and moral hazard problemsoriginated in the separation of two powers come up. To solve these problems, how to set upexecutive pay incentive and restraint mechanism becomes one of most important issues infront of every enterprise. Executive compensation has been soared up in recent years.What’s more, the dispersion between different levels is larger and larger. As for thisphenomenon, the public is in doubt about the rationality of executive compensation systemand strongly calls for strengthening the supervision and control of executive compensation.Is this large dispersion the result of hunting for efficiency or the symbol of inequity? Thisquestion has a direct influence on the stability and harmony of the whole society. So in myopinion, it’s necessary to study deep the status of compensation dispersion and itsmotivation effect, making appropriate suggestions for improving executive compensationsystem.The debate on the issue about executive compensation dispersion between tournamenttheory and behavioral theory has never stopped. Foreign scholars have made extensiveresearch from various aspects and perspectives. By contrast, the research in our countrystarts later and the conclusions is more diverse. In recent years, there is a greatimprovement in domestic market and investment environment. The reform of state-ownedenterprises and shareholder structure of listed companies is in a steady progress. Under thismacro-environment, whether Chinese listing company can take advantage of executivecompensation dispersion as an incentive means or not, the result is effective or not, andhow about it is under different conditions? All these are exactly what this article aims toresolve.This paper studies how executive compensation dispersion which is represented bydispersion between CEO and non-CEOs and variance among non-CEOs correlate withcorporate performance based on a sample of Chinese listed manufacturing companies in2010, by the methods of theoretical and empirical study. To dig into this correlation under different situations, this paper divides all samples into state-owned enterprises andnon-state-owned enterprises by ownership property, low-level payment enterprises,middle-level ones and high-level ones by the amount of payment. To make the result moreaccurate, enterprise scale, asset-liability ratio and ownership concentration are added intoempirical model as control variables. The study results show that tournament theory andbehavioral theory both apply to Chinese listed manufacturing companies. Exactly speaking,dispersion between CEO and non-CEOs has a positive correlation with corporateperformance, which is supporting tournament theory. Variance among non-CEOs isnegative, which is supporting behavioral theory. In addition，the degree of affection variesevidently in different surroundings in light of ownership property or amount of payment.To be specific, motivational effect of dispersion between CEO and non-CEOs is poorer instate-owned enterprises or in a state of low-level payment, and better in non-state-ownedenterprises or in a state of high-level payment. The negative impact of variance amongnon-CEOs is stronger in state-owned enterprises or in a state of low-level payment. Sovariance among non-CEOs should be much more decreased in these cases. |
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