Font Size: a A A

A Study On The Relationship Between Executive-Employee Pay Gap And Company Performance

Posted on:2017-04-21Degree:MasterType:Thesis
Country:ChinaCandidate:S T ZhangFull Text:PDF
GTID:2359330512974516Subject:Financial management
Abstract/Summary:PDF Full Text Request
In recent years,with the financial reporting disclosures gradually refined and the news of executives’ astronomical salary always to be exposed,the executive compensation of listed companies has aroused more and more attention.Seen from the previous literature,scholars’ research mainly focus on the relationship between the level of executive compensation and company performance.Since the 1980s,people has gradually shifted the focus into the relationship between the compensation gap and corporate performance.Especially in recent years,the relationship between the pay gap and enterprise performance is becoming a hot topic.Because the pay gap between executives and employees will affect the employee’s mental state and behavior which may have an impact on corporate performance.Furthermore,as each company has different nature of the property and different levels of internal control,the relationship between company performance and the pay gap may be slightly different,so the research on the relationship between the executive-employee pay gap and corporate performance is not only conducive to the development of sound compensation design theory,but also can guide companies design more scientific and reasonable compensation system in practice.This paper selects 2012-2014 Shanghai and Shenzhen A-share listed companies as the sample of this research and this thesis includes 6 parts as follows:The first part is an introduction.Firstly,the thesis mainly introduces the research background of this topic.Secondly,the thesis generalizes the theoretical significance and practical meaning of studying the correlation between the pay gap and corporate performance.Thirdly,the thesis expounds the methods and research framework of this study.Last but not the least,this part concludes the innovation of this paper.The second part is the literature review.This part summarizes and classifies the domestic and foreign scholars’ research conclusions about the correlation between wage gap and corporate performance,and makes a review based on this.The third part is the theoretical analysis and research assumptions.Firstly,the thesis defines the core concepts.Secondly,the thesis introduces the theory which can effectively explain the relationship between the executive-employee pay gap and company performance.The theories are tournament theory,behavioral theory and principal-agent theory.These theories provide powerful support to the hypothesis presented herein follow.The fourth part is the study design.This paper selects data and screens out sample according to the proposed hypothesis.Besides,with reference to previous studies,this paper chooses models,explanatory variables,selected explanatory variables and control variables.The fifth part is the empirical testing and results analysis.We first make descriptive statistics to the selected sample in order to know the overall results of the study sample.Then,we make correlation test and empirical analysis to get the relationship between the executive-employee pay gap and corporate performance,and finally we make a robust test to ensure the authenticity and reliability of the results.The sixth part is conclusion and recommendation which are summarized by previous regression analysis and results.Then,this paper comes up with some suggestions and points out the shortcomings of this article.Through the research,we found that there may be the following innovations:First,the research makes it closer to the reality.To verify the correlation between the pay gap and corporate performance,the existing literature are either considered to comply with the view of tournament theory,or support that the behavior theory can better explain the relationship,but this article think that the two theories are not diametrically opposed,this article will combine tournament theory and behavioral theory to analyze the correlation between the pay gap and corporate performance.It demonstrates the rationality of the various theories,therefore,the conclusion of the study is closer to reality.In addition,in order to ensure that the empirical results are more reliable,this paper uses the latest data and contrasts the pay of the executive with the company’s ordinary staff to calculate compensation pay gap which makes the research results more in line with the actual situation.Second,taking into account different nature of the property right and different levels of internal control of the various enterprises.When the thesis examines the relationship between executive-employee pay gap and the corporate performance,it takes into account the effects on the different property nature and the different level of the internal control.Different nature of the property right and different levels of internal control of the company has its own external environment,governance structure,operation mechanism,corporate culture and so on.Therefore,what kind of impact will the pay gap influence the performance of the company.This article attempts to enrich the study of the relationship between the pay gap and corporate performance from this perspective.
Keywords/Search Tags:Pay gap, company performance, compensation system
PDF Full Text Request
Related items