The Study Of The Relationship Between The Internal Compensation Gap And The Performance Of Listed Companies

Since2004, several documents about the regulations of central enterprises’ managers’compensation have been published. In2005, CSRC firstly asked listed companies to public the compensation of their managers in the annual report. In2008, Wall Street shared out bonus which was up to1.9billion when financial crisis happened. Along with all kinds of high payment of managers, people’s attention has focused on the relationship between the gap of compensation and performance. According some datum, the payment of our companies’managers is growing, and the gap of compensation has obviously difference among industries. Then reasonable continuous increase is becoming an issue which mass like to discuss. So far, the tournament theory and the behavior theory explain the relationship between the gap of managers’compensation and performance. The former figures expanded gap can improve the performance, but the latter has the contrary opinion. Until now, they have been verified in some scholars’studies.The object of study in this paper is the relationship between the internal gap of compensation and the performance of listed companies. This paper adopts empirical analysis method to test the datum of2006-2011, and then draw a conclusion. We try to judge the effect of performance assessment in these years and then provide proper advice. This paper consists of five parts:Chapter One:Introduction. It describes the background, significance, method, structure and innovation. Chapter Two:Literature Review. In this part, related theories are summarized and the results which are domestic and overseas about the relationship are collected and analyzed. At the same time, the concepts in paper are explained. Chapter Three:Research Design introduces the contents of hypothesis, variables and models. Chapter Four: Empirical Study. This is one of the most important parts in the paper, which use SPSS19.0to test datum, including description, correlation coefficient, regression analysis and robustness test. Chapter Five:Conclusion and Suggestions. It analyses the reason of results, offers the proposals and then points out the disadvantages in this paper. In the process of study, the gap of compensation is divided into the gap of managers’ compensation and the gap between managers’ and employees’ compensation. And the nature of the corporation as one of the factors is included in the models. On the basis of empirical results, the paper will contrast the attractiveness. Considering the various aspects to the gap, the paper further research the gap factors to improve the performance. The conclusions of this paper are following:Firstly, the gap of managers’ compensation and the gap between managers and employees have effects on corporations’ performance, the former is upright U, the latter is reverse U, which show the tournament theory and the behavior theory are complementary. Secondly, when the gap is a little, the gap of managers has better attractiveness, otherwise, the gap between manager and employee will be better. Thirdly, in state-owned enterprise, the better performance will cause bigger gap of managers. But no matter in what kinds of enterprise, the better performance will expand the gap between managers and employees. This paper still has some disadvantages, which exit in the choice of variables and the consideration of the characters of corporations.