The Research On The Influence Of Compensation Gap Of Intra-listed Companies In China On The Company Performance

In china, with the deepening of economic reforms, the compensation gap is widening within the enterprise. The soaring compensation gap has increasingly become the focus of attention. From macro perspective, the compensation gap affects the first distribution of national incomes. The reform of pay system is an important part of social income distribution reform, and it’s also an important part of economic development and social stability. On the micro level, setting a right scope of compensation gap helps to improve the staff’s work enthusiasm and labor productivity, thus enhancing the performance of the company.The academic circles have carried out extensive research, but did not reach consensus. The representative viewpoints are: tournament theory and behavior theory. The tournament theory agrees that compensation gap can motivate the ordinary staff, advocate expanding compensation gap can improve corporate performance. On the contrary, behavior theory thinks that compensation gap undermine the fairness of income distribution, reduce the company cohesion, resulting in a decline in the company’s performance. In reality, these two views are supported by empirical data. So, what kind of corporate compensation gap will enhance corporate performance?Therefore, based on the 2013, 2014, and listed companies as the research object. This paper studied the influences of the compensation gap within the management team on corporate performance and the influences of the compensation gap between the management team and the ordinary staff on corporate performance. In addition, this paper examines the core executive power and firm property rights impact on the company pay gap adjustment. The paper selected total return on assets(ROA) as indicators of corporate performance. In order to test the test of robustness of the model, we also Tobin’s Q as the alternative indicators of ROA and use absolute wage gap instead of relative wage gap.Through the empirical study, this paper finds that: First, the compensation gap within the management team do have an impact on the company’s current performance, increasing compensation gap within the management helps to improve company performance. Second, the compensation gap between the management team and the ordinary staff has inhibitory effect on corporate performance, reducing the gap helps to improve company performance. Third, core executive power weakened the executive pay gap within the team for the promotion of corporate performance; Fourth, the nature of state-owned enterprises has weakened executive pay gap within the team to promote company performance, enhance the senior management team and ordinary worker pay gap between inhibitory effect on corporate performance. The above conclusions, respectively in 2013 and 2014 data are established.The main innovation of this paper includes: First, in this paper, the compensation gap between the management team and the ordinary staff is studied. Past research mainly focused on the compensation gap within management team, compensation gap between management team and the ordinary staff caused less attention. Second, this paper studied the core executive power and firm property rights and corporate performance relationship of compensation gap adjustment, and made a beneficial exploration to the compensation gap problem.The main limitation of this paper include: First, the study did not consider non-pecuniary compensation and equity incentive effect. Second, the paper use management structure, equity dispersion degree, the percentage of independent director in the board as a measure of management power. The indicators are still stay at company-level, it is difficult to attribute to a manager.