The Effects Of Religion On Remuneration Fairness And Efficiency Of Private Enterprises

As an integral part of informal system,religion plays an important role in economic development.From the micro perspective,religion will influence the individual behavior and enterprise development through shaping the spiritual world of believers.From the macro perspective,religion plays an important role on national economy and cultural communication.Meanwhile,as an important part of corporate governance,enterprise remuneration is essential to solve agency problems and promote the long-term development of enterprnses.In recent years,the rising salary for the management and the widening remuneration gap have caused the attention among the public.Based on this,the fairness and efficiency of enterprises' remuneration have always been the focus of domestic and foreign scholars.Since 2009,various ministries have issued "salary restrictions" to regulate executive remuneration in listed companies,but the action does not reduce the pay gap among employees and managers.Informal system as the basis of formal system has attracted the attention of scholars.Based on the Agency Theory,Behavior Theory,Tournament theory,Optimal Contract Theory,this paper selects 1454 private listed companies from 2010 to 2016 as research samples,this paper explores the effects of informal institution(religious tradition)on the private enterprises'remuneration fairness and efficiency.Through empirical research,this paper finds that:(1)In regions with higher level of religion beliefs,private enterprises pay more attention to salary fairness;(2)in regions with higher level of religion beliefs,private enterprises pay more attention to remuneration efficiency.The possible reason for this result is that the religious tradition advocates altruism and emphasizes equality,so it is beneficial to restrain the selfish behavior of managers and promote the fairness of remuneration.At the same time,religious belief will affect the moral responsibility of executives to alleviate the principal-agent problem,and religious tradition can have an incentive effect on corporate governance,thus improving the efficiency of corporate compensation.China is operating in a more perfect formal system but the formal system still exists defects.From the perspective of informal institution,this paper studies the effect of religious tradition on the private enterprises' remuneration fairness and efficiency,which can not only the action does not reduce the pay gap among employees and managers.Informal system as the basis of formal system has attracted the attention of scholars.Based on the Agency Theory,Behavior Theory,Tournament theory,Optimal Contract Theory,this paper selects 1454 private listed companies from 2010 to 2016 as research samples,this paper explores the effects of informal institution(religious tradition)on the private enterprises'remuneration fairness and efficiency.Through empirical research,this paper finds that:(1)In regions with higher level of religion beliefs,private enterprises pay more attention to salary fairness;(2)in regions with higher level of religion beliefs,private enterprises pay more attention to remuneration efficiency.The possible reason for this result is that the religious tradition advocates altruism and emphasizes equality,so it is beneficial to restrain the selfish behavior of managers and promote the fairness of remuneration.At the same time,religious belief will affect the moral responsibility of executives to alleviate the principal-agent problem,and religious tradition can have an incentive effect on corporate governance,thus improving the efficiency of corporate compensation.China is operating in a more perfect formal system but the formal system still exists defects.From the perspective of informal institution,this paper studies the effect of religious tradition on the private enterprises ' remuneration fairness and efficiency,which can not only enrich the research of the economic consequences of a religion,but also expands the relationship between religion and micro enterprise behavior.Different from the previous literature on corporate remuneration,this paper combines the fairness and efficiency of remuneration,and studies the governance effect of religious tradition from two perspectives.In addition,the research results of this paper are of positive significance for exploring the ethical basis of corporate governance,and it will be helpful for enterprises to enhance the design of corporate remuneration by publicizing traditional religious culture and promote the long-term development of enterprises.