The External Fairness Of Executive Pay And Its Impact On Company Performances:A Case Study Of Listed Companies In Traffic Transport Industry In China

Fair and reasonable income distribution is an important performance of social fairness,also is the guarantee for promoting harmonious and the sustainable development of the society.As the modern enterprise system was established in China, Many scholars are very concerned about the issue of executive remuneration.This issue has been a focus as well as a difficulty point of the related studying.The first difficulty is how to quantify the Fair,which is a fairly subjective concept.The second difficult is that The content of the fairness is very wide. Generally, It contains three dimensions: The first dimensions is the individual fairness which caused by executives personal characteristics.The second dimensions is the internal fairness which shows the gap between senior management team member and average workers.The last dimensions is the external fairness which shows the gap between employees of similar jobs. The three dimensions of the fairness will have an effect on corporate performance,but the way and the result is different.Any different choice of samples or variables are likely to influence the outcome of the study. For the study of the individual fairness and internal fairness, domestic and overseas scholars barely able to come to similar conclusions.but for the study of the external fairness,they can’t get a consistent conclusion on the issue. In order to overcome these two difficulties as far as possible, this paper first improved the research methods of quantify the Fair.It do so by establishing a deterministic model of executive compensation,which can conclud a theoretical prediction. then, we divide this value by the real value.and we can get the Fairness index which can avoid subjectivity and unilateralism. Second,with a growing body of evidence suggests that ownership differences is the import factor which cause scholars to reach the different conclusions when they research the external fairness. In this paper, ownership differences will be taken into account.This thesis studies two aspects. One of the aspects is the degree of external unfairness in different ownership,The results show that the degree of external unfairness in state-owned enterprises is greater than in non-state-owned enterprise.The another aspect is about the the influence of external fairness to the enterprise performance.The sample is divided into four parts:the exceeded salaries of external unfairness in state-owned enterprises,the exceeded salaries of external unfairness in non-state-owned enterprise, the lack salaries of external unfairness in state-owned enterprises and the lack salaries of external unfairness in non-state-owned enterprise. This paper through regression model respectively study the effectof external equity of the four kinds companies.The results show that, in state-owned enterprises,neither excess of external salary unfair nor the difference of external injustice do significantly influence on corporate performance.In non-state-owned enterprise,the exceeded salaries of external unfairness has a promoting effect on enterprise performance.the lack salaries of external unfairness didn’t seem to affect the enterprise performance.Finally, this article puts forward three aspects policy recommendations in the light of the conclusions,the first aspect is about how to improve the external unfairness in enterprise.the second is about exerting the excitation effect of external unfairness.the last is about improvement of information disclosure liabilities of directors and senior management.