Product-market Competition, Managerial Power And Pay Gap Between Executives And Ordinary Employee

The research about Enterprise salary has been one of the academia hot topics. Especially as thebackground of the international financial crisis caused by U.S. Sub-prime crisis in2008, the dispute amongscholars about the executive is increasingly intense. As an important area of corporate governance, thecurrent development trend of executive salary has gradually tended to mature, the research in the field hasalso been further extended and expanded. But throughout the research status at home and abroad found thatthe research about the pay gap between executives-ordinary employees is still at the initial stage, mainlydiscusses the relationship between the executive team internal gap and performance or corporategovernance, while the less empirical research involving executives and ordinary employees pay gap. Alsofew literatures discusses pay gap based on the perspective of managerial power. Based on this, this paperwill take inspection whether managerial power effect the pay gap in Chinese listed company for thepurpose, combined with external governance mechanism—product market competition for furtherdiscussion. Vary the pace of China’s marketization reforms in different industries and regions, leading tomonopoly, oligopoly, and competition excessive and insufficient phenomenon. How much influence theProduct-market competition to the pay gap? Through the empirical research, in order to make certaincontribution to the corporate governance and salary system reform research in the future.This paper through the previous research results, and on the basis of related theory, combined with theChinese market competition as the special background and China’s listed companies as the research object,selecting the2006-2010four-year data of the Shanghai and Shenzhen A-share as samples. Bycomprehensive use of research and empirical research method and the main use of Stata11.0data analysissoftware, the paper makes an empirical research on the three hypothesis about the pay gap betweenexecutives and ordinary employees.The empirical analysis results show that:(1) By distinguishing the property, the greater managerialpower the more obvious inhibition effect for executives-ordinary employee pay gap especially instate-owned enterprises.(2) The fierce Product-market competition play a good role in mitigate thewidening pay gap of executives-ordinary employee in non-state-owned. That is, the greater the degree ofproduct market competition, the smaller the pay gap.(3)Comprehensive the two important factors ofcorporate governance, we found in state-owned enterprise The product-market competition more intenseand the managerial power more higher, the pay gap of executives and ordinary employees is still large.