The Empirical Study About The Executives-employee Compensation Gap Impact On Corporate Business Performance

Since the 1980s, executive pay has been the focus of research scholars, the research about the pay gap issues including championship theory and behavioral theory. As an important part of corporate governance, the executive compensation structure system is significant to the company business achievements. Since Nokia loss the sixth consecutive quarter, CEO E lop decline of wage although it is still up to 4.33 million Euros, including equity incentives. In 2012, the executives-employees relative wage gap of Fang Da Special Steel Technology Co., Ltd as high as 94. The wideness of executives-employee compensation, exactly what kind of impact on corporate business performance, and the tournament theory and social behavior theory in the process of the economic development of our country is the key point of this study.Using samples during 2009-2012, the research is aimed at study the link between pay gap and company performance of listed manufacturing companies in China. Using STATA11.0 software analysis tools to research the executives-employee compensation gap impact on corporate business performance and carried on the empirical research. Study found:the executives-employee compensation gap of monetary has the impact of inverted U shaped on corporate business performance. And the impact is applicable to the different nature of the company. The pay gap within a certain range, expand the pay gap played a positive role in promoting the corporate business performance, in line with the tournament theory connotation. When over the range of compensation gap, continue to expand the pay gap is negative impact on the company to the inhibitory effect, in accordance with the connotation of the theory of social behavior. There is a peak in the converse U curve, so we can put the pay gap in different range. Then, we know that it has a profound theoretical guidance on the corporate system reform in China. The company should focus on perfecting the compensation structure system, information disclosure system and establish a good equity incentive policy.