Pay Gap,Pay-performance Sensitivity And Investment Efficiency

In recent years,the pay gap among listed companies in China is increasing,the chaos of pay is rife and the executive compensation has become the focus of attention.At the same time,the country and people are no longer focusing on efficiency,but gradually focus on issues such as income distribution and social fairness,how to distribute compensation also becomes the key link of building a harmonious socialist society.State-owned listed companies are fundamental to a country,they not only bear the responsibility of economic development,but also shoulder the responsibility of maintaining social stability,so our country has issued government-imposed pay curbs for state-owned enterprises to maintain social equity and reduce the pay gap,but the existing research has different reviews on the assessment of government-imposed pay curbs.So this paper is based on the government-imposed pay curbs,researching on the impact on executive compensation and pay gaps first to observe whether it can play the role of wage restraint.Secondly,it studies on the influence of government-imposed pay curbs on pay-performance sensitivity and investment efficiency to observe whether it will be benefit to the development of enterprises,so as to find the deep impact on the enterprises.This paper starts from the background of mandatory wage restraint in China,contacts the similar law of restrictions on pay in China and other foreign countries,combines with the reports and evaluations of government-imposed pay curbs,analyzes the role of wage restraint to explore the development road of state-owned enterprises and provide a certain reference for regulators.Firstly,this paper reviews relevant literature,combs existing theories and combines research content to form a framework.Secondly,according to the research results on the salary limited laws and regulations of domestic and foreign scholars and combining with China's national conditions and media reports can put forward the research hypothesis.Then the study samples are selected from 2005-2015 Shenzhen and Shanghai A-share listed companies,using difference-in-differences method to explore the impact of government-imposed pay curbs on executive compensation,pay gap,pay-performance sensitivity and investment efficiency.Finally,according to the conclusion,the paper puts forward some suggestions on the remuneration reform of state-owned listed companies and prospects the future research direction.The empirical results of this paper show that: Firstly,the government-imposed pay curbs can play a role in limiting the executive compensation of state-owned enterprises,and the growth of executive compensation in state-owned enterprises is indeed inhibited to a certain extent.Secondly,the government-imposed pay curbs can play a role in limiting the executives-staff pay gap of state-owned enterprises,executives-staff pay gap has a significant decline.Thirdly,the government-imposed pay curbs results in a significant improvement in pay-performance sensitivity of state-owned listed companies,the link between executive compensation and corporate performance is tighter.This conclusion applies to most enterprises except for the industry of transportation,warehousing and postal services.Fourthly,The pay gap has a significant effect on the investment efficiency of enterprises,while the government-imposed pay curbs has a restraining effect on the investment efficiency of enterprises.Based on the above conclusions,this paper proposes suggestions from three aspects:both government intervention and marketization require attention;construct a reasonable performance appraisal system;design compensation based on industry characteristics.