Research On The Effect Of Executive Team's Internal Pay Gap Upon Investment Efficiency

As a core financial act of the enterprise,investment can create cash flow and provide support for the survival and development of the enterprise.The success of the investment project is not only related to the current and future development of the enterprise,but also closely related to the stakeholders.Therefore,to explore the factors that affect the efficiency of enterprise investment and how to improve the efficiency of enterprise investment have been an important research topic in the academic circle.From the macro perspective,the development of stock market in China to change the capital structure of enterprises,expand the financing way of listed companies also increased business investment and the uncertainty of the environment,has a far-reaching influence on the enterprise investment efficiency;from the microcosmic aspect,principal-agent problem and information asymmetry is an important cause of low the investment efficiency of Listed Companies in china.The compensation incentive system is one of the most important ways for modern enterprises to solve the principal agent problem,to promote the interests of shareholders and management interests,so as to improve the investment efficiency of enterprises.Since the reform and opening up,the purpose of our salary system reform is to link the salary of the employees with the business performance of the enterprises,so as to break the egalitarianism and produce a positive incentive effect.However,with the deepening of reform,the phenomenon of "sky-high salary" has been common in recent years,which means there is a large salary gap among the employees.So,as a decision maker of an enterprise investment project,what will be the impact of the salary gap within the team on the efficiency of the enterprise investment?In the background of China's socialist market economy,the proportion of non-state economy in China's economic total has gradually increased in recent years.An obvious feature of the non-state owned enterprises is the liquidity of its senior managers of large shareholders,for maximum benefit,will often take all positive ways to motivate managers to work hard,compared with the state-owned enterprises special political color and relatively inelastic compensation system seems to lead to the salary incentive effect is relatively weak.Then,what is the role of property rights in the internal compensation gap and the efficiency of investment?This paper adopts normative analysis and empirical analysis.Based on the compensation contract theory,tournament theory and principal-agent theory,the article use China's 2008-2016 Shanghai and Shenzhen A-share listed companies as the research sample,to find out the relationship between the internal pay gap and investment efficiency of the executive team and the role played by property rights using the empirical examination.In order to enrich the related research in academic and theoretical circles,it will provide some references for establishing effective and effective executive compensation incentive contracts and improving enterprise investment efficiency.The research conclusions are as follows:(1)Executive pay gap within the team of the enterprise have significant inhibitory effect on both excessive investment and inadequate investment;(2)compared to the state-owned enterprises,the internal compensation gap in the executive team has a more obvious negative effect on overinvestment and underinvestment in non-state owned enterprises.This article is composed of five chapters.The first chapter is the introduction,starting from the background and significance of this study,and based on combing the relevant literature at home and abroad,we form the research ideas of this paper,and introduce the innovation of this paper.The second chapter is the definition and theoretical basis of the concept.It defines the senior managers,compensation gap and investment efficiency of enterprises,and introduces the related theories of executive pay gap and investment efficiency,so as to lay a theoretical foundation for this article.The third chapter is the current situation analysis and research hypothesis.Based on the analysis of the institutional background,the present situation of executive pay gap in China is analyzed through data charts,and the hypothesis of this paper is put forward.The fourth chapter is the empirical test and analysis.We used the past literature to select research variables and build research models,descriptive statistics,correlation analysis and multiple regression analysis,to test the hypothesis of this study,and to test the robustness of the conclusions.The fifth chapter is the conclusions,recommendations and prospects,summarizes the research findings,and puts forward some suggestions from the aspects of the design of executive pay system,the promotion mechanism of executives,and finally summarizes the shortcomings of this research and prospects for future research.