The Research Of Promotion Opportunity And Pay Gap

Since2005year the executives’ compensation data are publiced, and then the pay issues are attracted more attention because of the reported and supervised by media, and more and more people are concern the increasing pay and pay gap. However, there is448Chairmans of the Board, more than percentage37in whole Shanghai Stock Exchange and Shenzhen Stock Exchange, who got zero compensation in2008year, which make obviously contrast with higher pay. By the CSMAR, there are about percentage37who decreased the pay gap when the income are increased in2006to2011year. By the theory, the executives can draw up a salary contract which benefit for themselves through power, and help them get excess pay, meanwhile make the executives’ pay and employees’wage unequal change, widen the pay gap between executives and employees. Why the executives who have power choose the zero pay and decrease the pay gap under the increasing pay and pay gap? Whether the executives can get other benefit make up the insufficient compensation by other way?Due to the SOE executives appointed by the government, and they have administrative level. However, compared with the same level government officials, the SOE senior executives can enjoy the same political status, most of the SOE executives hope to convert the party or government officials. Only change into the government official can improve his administrative level and last the political life. The Leader of Party and Government Exchange through by the Centre Committee of CPC demand that choose the leaders of SOE and institutions to work in the party of CPC, meanwhile recommend the leaders of the party of CPC work in the SOE and institutions. Thus, the cross-border exchange of SOE executives and government officials is widespread. For example, Jia Qing lin the former Committee of CPC who was the CEO of China National Machinery and Equipment Import and Export Corporation. Miao Wei the minister of the Ministry of Industry and Information Technology who was the CEO of the Dong Feng Motor. Guo Shengkun the Deputy Secretary of Central Political and Law Commission and Minister of Public Security deputy who was CEO of the China Aluminum Corporation. Su Shulin the Governor of Fujian Province who was CEO of the China Petroleum and Chemical Group. Li Xiaopeng the Governor of Shanxi Province who was CEO of the China Huaneng Group. Xiao Yaqing the Deputy Secretary-General of the State Council who was CEO and party secretary of the China Aluminum Group. The SOE executives pursue personal career development goals has a strong tendency to promotion under the particularly background. The executives are tend to pursue to promotion under the promotion opportunity. Whether the promotion opportunity can lead the executives who have the power to decide their compensation to choose the zero pay and decrease the pay gap?The existing research have focused on the incentive effects and economic consequences of the government officials or SOE executives political promotion. For the government officials, the promotion opportunity is more than the local finance revenue, and the excitation can improve the GDP of the province, but it leads to local protectionism and repeat building. For the SOE executives, there is a significant positive relationship between the political promotion and the performance, meanwhile the executives engage the negative effects of behavior, such as construction image project and individual risk behavior, for the political promotion. These political promotion research are about the occurred political promotion to test its effects of the government officials or SOE executives, for example, the promotion can improve the performance or local economic development. Also, some research find that good economic performance is the reason of the promotion of government officials or SOE. Thus this method may exists the endogeneity problem whether consequences lead to promotion or promotion lead to consequences.Based on the above analysis, this article measures the former executives promotion as the current executives promotion opportunity and then tests the effect of the former executives promotion for the current executives. Meanwhile, the article tests the executives how to choose the compensation and the pay gap how to change when the executives face with the promotion opportunity. The article hope to provide advice for the executives compensation. The article is make up with seven chapters: The first chapter:Preface. This chapter introduces the research background and significance, the main contents and framework, the research methods and the main innovation of the article.The second chapter:Document Summary. This chapter reviews the existing research form the two aspects of the political promotion and the pay gap, and then gives a brief review for them.The third chapter:Analysis of Institutional Background and Hypotheses. This chapter analyzes the Institutional Background of China, and then puts forward the hypothesis of this article.The fourth chapter:Research Design. This chapter defines the main variables of this article, model, sample, and data.The fifth chapter:Analysis of the Executives Turnover. This chapter from three aspects:the turnover frequency, the turnover reason and the analysis of the promotion type introduces the SOE executives turnover from2005to2012year.The sixth chapter:Empirical and Analysis. This chapter from four aspects:the descriptive analysis, empirical analysis, further analysis and the robustness test introduces the result of empirical.The seventh chapter:Conclusion and Suggestion. This chapter generalizes the conclusions of the article, and then further gives the suggestions.By the results of our study, we have discovered that there is a significant negative relationship between the opportunity of promotion and the pay gap, the senior executives who are face with the opportunity of promotion are willing to accept the lower compensation and decrease the pay gap. There is a difference of the incentive effect between the opportunity of the government promotion and the units promotion, the negative relationship between the opportunity of government promotion and the pay gap is less than the negative relationship between the opportunity of units promotion and the pay gap, and the higher of the space of the promotion, the lower of the executives compensation, and the more obvious inhibitory of the pay gap. However, we further find that the opportunity of promotion can’t reduce the agency COSTs between stockholders and executives. Our conclusions explain the phenomenon of the "Zero-pay" and lower pay, and enrich the existing research, meanwhile provide the more empirical evidences for the Motivation Theory. There are four innovations of this paper. Firstly, this paper systematically analyzes the promotion types of the executives, thorough analysis the political promotion of government level as well as position level, then clearly depicts the path of political promotion of the SOE executives. Before the basis research on the whole, this paper further distinguishs the types of political promotion, the study finds that there is a difference of the incentive effect between the opportunity of the government promotion and the units promotion, the negative relationship between the opportunity of government promotion and the pay gap is less than the negative relationship between the opportunity of units promotion and the pay gap, and the higher of the space of the promotion, the lower of the executives compensation, and the more obvious inhibitory of the pay gap. Secondly, different from the previous studies, this paper sees the former senior executive who got a work in government or a higher position in units as promotion, then measure the opportunity of promotion for the current senior executives. Which can reduce the endogeneity problem on some extent. Thirdly, this paper studies whether the promotion opportunity can effect their compensation, then the paper considers the employees in the study besides the executives. The conclusion is that the incentive of the implicit political promotion is stronger than the compensation for the executives. Fourthly, this paper further finds that the promotion opportunity can’t reduce the agency COSTs between stockholders and executives. The executives may use the firm resources to engage no-productive rent-seeking activities, establish the personal network for the promotion. Therefore, their increasing the agency cost between the shareholder and executives. This paper provides the empirical evidences for potential negative incentive effects of the promotion from.