Relationship Between Internal Pay Gap Of Manufacturing Enterprise And Corporate Performance

In the past twenty years, the problem of salary of China’s listed Corporation hasbecame hotspot of all types of researches because salary is directly related to thecompany executives and employees’ working enthusiasm, so as to the entire firmperformance. From the existing literature reviews we can see that there are not a lot ofstudies about the compensation gap impact on enterprise performance, and they aremainly concentrate on the research about the influence between executive pay gap andfirm performance. There are few studies about the influencing factors of compensationgap and the influence of pay gap between executives and workers to firm performance.On the research object selection, most researchers choose all of the listed companies inShenzhen and Shanghai stock exchange as research objects, they have not subdividedthese companies according to different enterprises. Considering different industriesmay exist differences in management mechanism, salary system and human resourcesarrangement, which might have impact on the compensation level, staff incentivedegree and enterprise performance, this paper intends to select one industry to analysis.Based on the important role of manufacturing industry in the development of ournational economy, and big salary gap of China’s manufacturing industry (more than20times), there is an important meaning for optimizing the management right, reformingthe income distribution structure and more advantageous to improve employeesatisfaction and enterprise performance by researching influential factors to internalsalary gap in manufacturing industry and the relationship about the salary gap andenterprise performance.Innovations of the thesis are as follows: firstly, most of the existing studiesresearched the relationship between the TMT pay gap and corporate performance,remuneration in this paper includes not only TMT salary gap, but also gap betweenexecutives’ team and non-executive team. Secondly, we get rid of the mode to study therelationship between pay gap and corporate performance in a single theory, combinethe Behavioral theory and the Championship theory, which seeming opposite, together,and use data to prove that the relationship between pay gap and corporate performancerequires the support of the two theories.In the research method, we use normative research method and empirical researchmethod, combining static analysis and dynamic analysis, take manufacturing listed companies as the research object. Companies can be divided into state-ownedenterprises and non-state-owned enterprises according to the final property category’sdifference, because there may be some larger differences in human resourcemanagement, enterprise operation,corporate governance and salary system.Settings oftwo kinds of enterprise derive from the different nature of property rights, whichmaking the gap between their pay have certain differences. According to the differentregions, the selected samples can be divided into coastal areas enterprises andnon-coastal areas enterprises. Regional differences may lead to economic developmentlevel’s difference, and the level of consumption is put in bigger difference, so as tosalary level, which led to the salary gap have certain differences.At the same time, the paper also studies the management rights (chairman of theboard and the general manager’s concurrently) and equity structure (proportion ofstate-owned shares and ownership concentration)’s affects to the salary gap. In order toeliminate effects of other factors, enterprise scale, asset-liability ratio, enterpriseperformance of the previous year and enterprise growth were added to this paper tocontrol. And this paper further analyses the influence of salary gap to enterpriseperformance, and join the scale of the enterprise, asset liability ratio, the number ofexecutives, enterprise property and ownership concentration to control.The conclusions of this study are:(1) The remuneration level of listed companiesin China’s manufacturing industry is improving in recent years, the pay gap betweenexecutives and the pay gap between executives and workers showing a general trend ofincreasing overall. When coastal and non-coastal areas are compared, the coastal areasget higher; when state-owned enterprises and non-state-owned enterprises arecompared, non-state-owned enterprises get higher.(2)Influence factors on pay gap.Management right concentration plays a positive role in pulling the pay gap greater;Stock equities’ excessively concentrated and a disproportionately large share ofstate-owned shares pay certain negative effects.(3) There is a positive correlationbetween pay gap and corporate performance, verified that the Championship theory ismore suitable for China’s listed companies, also verified that the pay gap and corporateperformance exists range effect， the pay gap is not conducive to businessperformance’s improve within a certain range. So that not only the Championshiptheory but also the behavior theory suit for China’s listed companies, and differenttheories play a leading role in different cases. According to the results of the study, this paper puts forward the followingsuggestions:Establish a market manager personnel hiring system and optimize corporategovernance mechanism; Reasonably arrange salary gap to improve the enterpriseperformance, strengthen restriction to the executives and staff salary incentive;Optimize management rights...