Research On The Correlativity Between Compensation Dispersion Of Private Listed Companies And Excessive Investment

As the leaders of the enterprise, The company’s senior management team master the company’s major decisions and governance in the process of the whole company. and play a crucial role to the develop ment of the company. The effectiveness of the compensation contracts determine whether the executive compensation designment has appropriate incentive effects, and will affect the value of the company. As an important content in the design of compensation, the incentive effects of compensation gap are directly shows valid of the compensation mechanism of enterprise. the exsiting research about executive pay gap is mainly about correlativity between the executive pay gap and the value of the company, the executive pay gap is maily about internal pay gap. This method that inspect directly the correlativity between the executive compensation between the company’s value ignores the mediating role of executive behavior affected by the management incentive. In this paper, we will put the eyes on corporate investment efficiency and based on the characteristic of economic system environment in China. The object of study is set as private holdings of listed companies. Based on the tournament theory, the excessive investment will be set as the bond between pay gap corporate performance.We will research the correlativity between the executive pay gap and the excessive investment.The executive pay gap will include the external pay gap.Besides, In view of C hina’s emerging transitional institutional background, This article introduced the marketization external governance environment variables to explore whether the development of the area the marketization process of listed companies will influece the incentive effec t of the executive pay gap.Based on the principal-agent theory and tournament theory as the theoretical basis,using the normative research method combined with empirical research methods, from two aspects of external and internal pay gap compensation gap,we start the research the correlativity between the executive pay gap and excessive investment. Through the empirical findings, external and internal executives pay gap of private listed company will inhibit the action of the excessive investment behavior which verify the applicability of the tournament theory. In the further research, The development of the marketization process of listed companies will significantly impact the incentive effect of executive pay gap.