Study On The Relationship Among Institutional Environment,External Unfairness Of Executive Compensation And Firm Performance

A basic feature of the modern enterprise system is the separation of the two powers,that is,the separation of ownership and management rights.With the continuous progress and development of the current social economy,the social status of enterprise managers is also constantly improving.How to encourage executives,to reduce agency costs,to make their interests tend to be consistent is a hot issue of concern to researchers at this stage.In reality,the phenomenon of "high price compensation" has been frequent,and people have begun to pay attention to the issues of fairness and rationality of executive compensation.Since 2005,China's "Financial Report Disclosure Regulations" mandated listed companies to disclose current executive compensation.The transparency of salary is conducive to the comparison between senior management and similar positions in the same industry outside the company,in order to form their own compensation fairness cognition.The fairness of executive compensation not only affects the society's perception of fairness,but also directly affects the management behavior of the company's managers and ultimately affects the company's performance.Therefore,the economic outcome of the unfairness of executive compensation is an important issue for the theoretical community.However,there are two limitations in the current theoretical research on executive pay equity.First,the limitations of the research perspective.With the further contradiction between fairness and efficiency,more and more scholars have begun to pay attention to the unfairness of executive compensation.However,at present,the focus is on the pay gap between executives and employees,that is,the internal equity research of executive compensation.Research on external unfairness of compensation is less involved and the results are inconsistent.Second,the research methods are inconsistent.There are three main ways for domestic and foreign personnel to measure the external unfairness of executive compensation:(1)questionnaire survey method,which uses the salary satisfaction of employees to measure the degree of pay equity,but the method lacks objectivity;(2)salary gap,which directly calculates the absolute salary gap.This method ignores the reasonable salary difference between personnel;(3)the additional compensation method,borrows or develops the compensation decision model to calculate the residual,and uses the residual to represent the external unfairness of compensation.It overcomes the important influence of the differences between executives and corporate characteristics,but determining the model factors is subject to the subjective judgment of the researchers.In recent years,some scholars have also opened up new paths,using the methods of salary performance percentile and relative fairness to research,and the results are also inconsistent.Based on these,this paper focuses on the external unfairness of executive compensation,from the perspective of system environment explores the economic outcomes generated by external unfairness,and constructs the theoretical models.On this basis,the relevant data of 1665 A-share listed companies in 2012-2017 were compiled.Through theoretical analysis and inductive deduction,models were empirically studied with SPSS 23.0.The main problems were analyzed:relationship between positive unfairness,negative unfairness and corporate performance;the nature of property and system environment have the moderating effects on unfairness and performance respectively.Through the empirical test of the above problems,the paper draws the following conclusions:(1)the external unfairness of executive compensation has different effects on corporate performance,and there is a significant positive correlation between positive unfairness and corporate performance and a significant negative correlation between negative unfairness and business performance.(2)The nature of property has no significant moderating effect on the relationship between positive inequality and corporate performance,while plays a significant negative moderating effect on negative inequality and corporate performance.(3)The marketization process has a significant negative moderating effect between positive inequality and corporate performance,and has a significant positive moderating effect on negative unfairness and corporate performance.Finally,the main research conclusions of this paper are summarized and related suggestions are put forward.At the same time,the shortcomings of this paper are pointed out,in order to be improved in future research.