Study On Effectiveness Of Asymmetry Change In Compensation

The issue of company gap has become a top issue which is concerned by the circle of theory and practice since1980s. The domestic research of company gap is limited within the executive team at the beginning. In recent years due to the repeated exposure of executives’astronomical salary, some scholars began to study the company gap between executives and employees. But these studies are mostly based on the perspective of compensation design. They don’t refer to the reasons for the widening of the company gap between executives and employees. In2006, Qin Hui used the way of geometrid advance to describe the phenomenon of asymmetryal power and responsibility under the leading of potentates. Shi Ziyan in2007pointed out that this asymmetry change in companies’compensation changes may be the cause of enlargement of compensation gap between management and ordinary employees. This hypothesis provides a new perspective to explain the widening of compensation gap between management and ordinary employees. In2011, Fang Junxiong selected the data of china’s public companies from2001to2008, proved the compensation of management and ordinary employees exists asymmetry changes: When company’s performance increased, executives compared to ordinary employees obtained greater increase in compensation, when company’s performance decreased, the addition of executives’compensation was not significantly lower than the ordinary employees’. At present only the above-mentioned scholars researched the reason of the widening of compensation gap between management and ordinary employees’ there is no confirmatory literature. After the2008financial crisis, the management environment of china’s companies changed greatly, it’s necessary to check that the asymmetry change still exists or not. In addition, there are no studies in the existing literature research the relationship between compensation geometrid effect and the future performance of company.This paper selects the data of state-owned public companies in Shandong Province from2001to2008. uses the method of combining the normative research and empirical research. First, we measured the compensation performance sensitivity of management and ordinary employees; after that we test the existence of compensation geometrid effect in Shandong State-owned public companies; finally, we analyzed the relationship between asymmetry change in compensation and future performance of company which is based on the above research conclusion. In order to test whether the staff type and direction of changes in corporate performance play a regulatory role between dependent variables and explanatory variables, we design interaction term in the model.The empirical results show that the compensation changes of executives and ordinary employees are significantly positively correlated with corporate performance, which means State-owned public companies in Shandong province has preliminarily formed a results oriented employee compensation mechanism. Asymmetry change in compensation has been verified in the empirical analysis:When company performance rise, compensation performance sensitivity of management is significantly higher than ordinary staffs’; when company performance decline, the change of executive compensation show sticky characteristics, while there are no sticky characteristics found in the change of ordinary staffs compensation. Regardless of company performance is increasing or decreasing, in the process of compensation distribution, management always obtains more benefits than ordinary staff. The article found that asymmetry change in compensation has a negative impact on the future company performance, we also find this negative effect is more obvious when company performance decline.