The Research On Effect Of The Salary Gap Between Executive And Employee On Company Performance

The issue of compensation design of listed—companies has become a top issue since1980s.It is concerned by the circle of theory and practice.This is because the problem ofcompensation gap has a direct impact on the working mood of inter—companyemployees,thereby effects the performance of the whole company.But most of the existingresearches only discuss the relationship between the compensations of executives andcompany performance.The existing researches about the relationship between compensationgap of the executive management–ordinary workers and company performance are littlerelatively and the conclusions are not consistent.Meanwhile,existing researches have rarelyinvolved in the specific application environment of compensation gap.Therefore,the researchto the relationship of compensation gap and company performance in the specific applicationenvironment can not only advance the development of the compensation theory ofcompanies,but also help us understand and evaluate the reform of compensation system ofcompanies objectively.It can guide the compensation decision and staff managementscientifically and has important significance to theoretica1and practical.This paper selects2009—2011A share listed companies as the research samples, puttingforward hypothesis based on tournament theory and behavioral theory. Through empiricalresearch,the effect of executive and employee salary gap on corporate performance isexist,and is the inverted U relationship.The conclusion is that the compensation gap andcompany performance is positively related in a certain range, but beyond the range, they arenegatively related. After comparing state—owned company with non state—ownedcompany,we found that when the nature of property rights is different,executive and employeesalary gap effect on corporate performance is different and the non state—owned companycan accept the larger pay gap. Executive and employee salary gap effect on corporateperformance of manufacture company and non manufacture company is the inverted Urelationship, and the non manufacture company can accept the larger pay gap.According to the results of empirical research,the paper aimed at putting forward thefollowing suggestions:designing the salary gap should combine with their own specific circumstances,for example the nature of property rights,the industry characteristics and soon.Our government should improve the salary system of state—owned company,at the sametime,pay attention to improve the executives and employee salary gap of non state—ownedcompany to ensure the healthy operation of economy.