The Relationship Between Compensation Gap In Top Management Team And Corporate Risk-taking

Risk-bearing level is the key to the healthy and sustainable development of the enterprise.It helps companies to improve the core competitiveness and to maximize the enterprise value.With the higher level of corporate risk-bearing,the companies not only show higher enthusiasm to innovative project,but also generate more capital expenditure such as fixed assets and other long-term assets or invest more intangible assets such as R&D.In other words,it also means that enterprises have higher willingness to invest in high-risk but high-yield longterm project,and pay more attention to the formation of enterprise competitive advantage and strategic development.The influencing factors of enterprise risk have become the focus of research in recent years.In general,company's top managers make the major decisions together,senior executives' risk-bearing willingness determines the enterprise risk-bearing level.But the separation of the ownership and management rights in modern enterprise may make decision that damage the owner,such as much more likely to give up high-risk projects which may have a positive net present value according to their own personal risk aversion.The pay gap between senior management team members has become one effective way to solve the principal-agent problem between top managers and owners.This paper is started with the top management pay gap,and carries the empirical analysis with the non-financial listed companies which issued a-share in Shanghai and Shenzhen main board during year 2007-2014,then studies the relationship between internal pay gap of the senior management and the enterprise risk-bearing.What's more,it also studies their relationships in different property companies.This paper empirical results show that significant negative correlation does exist between pay gap and corporate risk-bearing,which means that greater pay gap reduce the corporate's risk-bearing,especially in state-owned enterprises.The conclusion of this paper perfects the research system of executive pay gap,and provides some reference to design the executive pay.At the same time,it verifies that compared with tournament theory,behavior theory is more suitable in our country.In addition,it finds a reasonable thinking for the reversed relationship between the executive pay gap within the team and business performance.