Executive Compensation Gap,Institutional Investor Ownership And Corporate Risk

In recent years,the issue of executive compensation problems made a lot of storm.The astronomical pay and super welfare have become a hot topic.The phenomenon of paying attention to reward and ignoring the punishment was frequently exposed.Can such salary arrangements really alleviate the conflict of interest between executives and shareholders,reduce agency costs and enhance the value of enterprises?In the private enterprise of our country,the internal management team will usually set pay gradient for different positions of team members,mainly in order to strengthen the internal competition consciousness of executive team,actively participate in the enterprise management process and create more value for the enterprise.However,when the gap of team members' salaries is too large to lead to the adverse selection and moral hazard.Excessive salary gap may lead to excessive competition within the team so that managers make radical business decisions and increase business risk.It may also make relatively low-paid managers feel unfair,exploited and working passively that affect normal production and operation.No matter what the situation will have an impact on the development of enterprises and bring some risks of continued business.Institutional investors as an enterprise investor,they participate in corporate governance to take corporate governance responsibilities.They can effectively supervise the business activities and managers' behavior,actively safeguard their own interests and promote the sustainable development of enterprises.Based on principal-agent theory,this dissertation takes the tournament theory and behavioral theory as the theoretical framework for the study of the relationship between executive pay and corporate risk,and analyzes the governance effect of institutional investors through corporate governance theory.After a series of theoretical deductions,reaching hypothesis,establishing research model,accessing to relevant research samples.Starting with the listing of private-owned private enterprises as the research object and starting from the executive pay gap,this paper studies the correlation between the executive salary gap which is in the vertical direction of the executive team and the enterprise risk when it is based on championship theory and studies the relationship between the horizontal direction's salary gap of the executive team and the enterprise risk based on behavior theory.The logarithm of the difference between the CEO's salary and the average salary of non-CEO executives is taken as the measure of executive vertical pay.The coefficient of variation of non-CEO executives is used as the measureof horizontal pay gap and tested empirically through multiple regression.More comprehensive and more targeted analysis of senior management team members within the pay gap between the issues,enriching the theory of pay incentives,to fill the gaps in academic research,but also for the enterprise incentive pay system and provide some ideas to improve China's executive Pay Disclosure System.At the same time,the institutional investors as a regulatory variable into the study,and depending on whether there is daily trading relationship with the invested unit divided into pressure-resistant institutional investors and pressure-sensitive institutional investors.The author conducts a comparative study on the enthusiasm of the two types of investment to supervise the enterprises,to verifies their regulatory effect on the relationship between the executive pay gap and the enterprise risks by using the level regression analysis method,and enriches the theory of corporate governance.The corresponding empirical results can be helpful to the relevant management Department to guide and provide some reference to promote the development of institutional investors.Looking at the current academic research,there are few researches on the salary gap and corporate risk in the senior management team.This article will pay the executive team members' salary through vertical and horizontal direction and study the executives in a more comprehensive perspective Pay gap and corporate risk,and to verify the regulatory effect of different institutional investors to enrich the academic research on institutional investors.In this paper,through the multiple regression analysis,there are empirical results of four aspects:Executive salary gap in the vertical direction is significantly positively correlated with the risk of business,the salary gap of the horizontal direction and business risk is not significantly positive correlation;There is a significant negative correlation between institutional investors and corporate risk,among which there is a significant negative correlation between pressure-resisting institutional investors and firm risk,and there is not a significant negative correlation between pressure-sensitive institutional investors and corporate risk;The institutional investors have a significant negative correlation between executive salary gap of the horizontal direction and the enterprise risk;Pressure-resisting institutional investors can significantly reverse correlation between the executive salary gap of the horizontal direction and the enterprise risk.The Pressure-sensitive institutional investors can non-significantly reduce correlation between the executive salary gap of the horizontal direction and the enterprise risk.Based on the above conclusions,this paper proposes the following recommendations:Optimize the executive pay disclosure system;Promote the development of institutional investors;Improve the external market environment;Constantly impro vethe enterprise salary incentive mechanism.