An Empirical Study Of Pay Dispersion, Governance Structure And Firm Performance

In recent years, as the executives who get thousands and millions of compensation increasing, it makes the pay dispersion between executives keep growing. This phenomenon has been risen much more concern of the public and the academia. In a variety of high-paying industries, the High-tech industry could not be ignored. Because human capital is the basis for the development of High-tech companies, the senior manager in high-tech industry is the backbone of the company, they are vital to the strategy implementation and goals achievement of corporations. In order to attract the talent, the company use remuneration as a means of competition, the compensation of executives is quite attractive and the higher the position, the greater the pay dispersion. As we all know, China's high-tech companies start late, corporate governance structure is still not perfect. The effectiveness of corporate governance is not high, the relationship between executives pay dispersion and firm performance is a leading issue in the field of corporate governance.Scholars of domestic and foreign do a lot of researches on the relationship of pay levels pay structure and performance, but few have pay attention to the relationship of pay dispersion and performance. This paper selects 150 high-tech companies listed before 2007 as a sample. Analyzes and sorts out the data of 2008-2012 from its annual report,uses stata11.0, make a empirical on the relationship of pay dispersion and performance as well as the adjustment factors. Our empirical results show that:The pay dispersion has a lag effects, it will have a significant negative impact on the firm performance of next year; the effectiveness of corporate governance plays a positive regulatory role on the relationship between pay dispersion and performance. It can weaken the negative correlation between pay dispersion and performance; Managerial discretion plays a positive regulatory role on the relationship between pay dispersion and performance. It can weaken the negative correlation between pay dispersion and performance.On the basis of the empirical results, we has given several corresponding recommendations:First, the high-tech companies should improve the effectiveness of corporate governance and the executives should focus their eyes on the advertising and R&D investment. Second, On the design of executive compensation, we should develop a reasonable pay dispersion, optimize the remuneration structure, pay attention to combine the executives'short-term incentives and long-term incentives together.