Product Market Competition And Executive Compensation Reference Effect Research

As the direct management of business executives,the salary level is always a key problem in the field of corporate governance.At present,most scholars mainly study on the basis of the two theories of managerial power theory and optimal contract theory,but the two theory is mainly about the absolute pay,pay less attention contract reference role.In real life,in addition to economic preferences affect people's behavior,social preferences will also affect people's behavior.Therefore,studies have shown that enterprises in setting the company's compensation contract,one of the most important factors is the reference to the same industry standard salary.At the same time considering our country attaches importance to the special institutional background of fairness,this factor may be more obvious in our country.However,enterprises are due to certain organizational environment,the external environment in different in the environment of the enterprise and the status differences will produce different effect on shaping the organization.In particular,the structure of the product market is an important organizational environment influence its survival and development.Therefore,in the different market competition environment,whether the reference effect will be different in the enterprise compensation contract,and whether this effect will vary according to the different competitive position of the enterprise.In addition,when the market began to use this reference effect whether causing the executives' compensation and rising executive perquisite consumption and voluntary turnover increased,all of these need to be studied further.Therefore,this paper intends to research executive compensation peer reference effect and its consequences from the point of view of market competition.By using the data of Listed Companies in Shanghai and Shenzhen for 2002-2014 years,this paper analyzes the influence of market competition on executive compensation and peer reference effect from different angles.Firstly,this paper examines the different market environment,whether the different executive compensation reference effect.Secondly,according to the market position of enterprises in the industry to consider whether there are differences between the reference effects.Then,when companies use reference effect whether bring rising executive pay,as well as in different market environment whether executives through on-the-job consumption and voluntary turnover to strengthen their interests.The empirical research shows that the more intense market competition,the executive compensation reference effect is stronger,the higher the enterprise market competition status,executive compensation reference effect is weakening,the industry lags behind relative to the industry leader,executive compensation reference effect stronger.At the same time,we also found that the anchoring effect of executive compensation is to drive the growth of enterprise executive pay and on-the-job consumption and the increase of leaving voluntarily,and this kind of influence is more obvious in the environment of fierce competition in product market.