Study On The Ratchet Effect Of The Listed Company’s Compensation And Its Influence Factors In Our Country

Recent years, with the rapid development of China’s capital market, the number and size ofthe listed company continue to expanding, the listed company’s compensation is also growingrapidly without following the performance. Specific analysis for executives of listed companiesin China as well as staff salaries showing a ratchet effect phenomenon, and its influencing factorswere studied. Articles2007to2011, China’s manufacturing industry listed companies as sampleswere analyzed from the perspectives of industry benchmarks and luck remuneration generationof the ratchet effect. It was found that executive pay ratcheting or staff salaries ratchet effect, aresubject to the positive influence of the industry benchmark, the industry benchmark will promotethe generation of ratchet effect; at the same time, luck remuneration inhibits the generation of theratchet effect. The company whose performance is greater than the industry average performanceof the company, the extent of their remuneration ratchet effect below the lower performance ofthe company. Agency costs variables, the impact of executive self-interest variable and corporategovernance variables are analyzed for further study of the mechanism of the ratchet effect. It wasfound that agency costs having no significant effect on the generation of the ratchet effect;executives’ self-interest and corporate governance variables will affect the ratchet effect at acertain extent.