An Empirical Study On The Internal Salary Gap And Its Performance In Financial Listed Companies

Nowadays, the outbreak of the international financial crisis in 2008 is still affecting the world economy and has exposed a major flaw of the global financial system and the system of financial regulation. In this regard, a considerable part of experts and scholars attributed the causes of the financial crisis to excessive financial-institution-executive pay’s level. Thus, the representative of numbers of international financial regulators-- Basel Committee on Banking Supervision, as well as several countries began to draft strict specifications on pay’s level of executives who work in financial institutions. Till now, the world financial regulators to regulate executive pay has made great progress in the "pay effective governance", "stakeholder participation and supervision" and "pay with prudent risk propensity match" and so on.This paper lists the defects of the regulation on financial-institution-executive pay when the financial crisis broke out. Secondly, this research combed executive compensation system reform in financial institutions from both international and domestic aspects. Finally, the author select unbalanced panel data from 43 listed companies in the financial sector in China from 1999 to 2013, build model to determine the quantitative relationship between the financial firms’ internal pay gap and the company’s performance, also from the time series and industry dimensions to measure the effectiveness of a range of various types of regulation which regulate executive pay in financial institutions which China’s financial regulatory agencies issued since 2009 and made suggestions that the relevant authorities in the future need to continue improving the pay system as a preventive measure from three aspects, and as much as possible to reduce the probability of similar incidents.