D&O Insurance,Pay Dispersion And Enterprise Risk-taking

With the rapid development of China's economy and the increasingly fierce competition in the enterprise market,human resources play an increasingly important role in enterprise management.The proportion of high-quality personnel in the number of employees determines the effectiveness of enterprise management to a certain extent,and salary incentive is an important means to improve the effectiveness of human resources management.Mature and effective salary incentive can greatly mobilize the enthusiasm of employees,make them better display their ability after obtaining satisfaction,make every effort to carry out enterprise management,improve enterprise performance,and make the shareholders and executives of enterprises achieve win-win under the theory of separation of powers.Therefore,salary incentive has always been the focus of academic discussion.How to formulate a reasonable salary structure to make the salary incentive better play its role has become an important issue in enterprise management.As an important branch of salary incentive system,whether the rationality of salary disparity will affect managers'decision-making on enterprise risk-taking remains to be further studied.The full name of D&O insurance is directors' and Executives' liability insurance.Its birth can be traced back to the 1930s.As a supplement to the internal governance mechanism,D&O insurance has been a hot topic in academic circles,and its corporate governance theory has gradually improved.However,due to the slow introduction of D&O insurance into China,the insured rate of D&O insurance of listed companies is not high.Whether D&O insurance can be applied to China's capital market is still unknown.Therefore,further research on the effect of D&O insurance has certain theoretical and practical significance.This paper chooses Shanghai and Shenzhen A-share listed companies from 2005 to 2017 as the initial sample,and from the perspective of corporate governance,using the methods of normative research,empirical research and robustness test comprehensively,firstly,it studies the internal pay gap between executives and employees and the mechanism of the external pay gap between executives to bear corporate risk.Then,by introducing D&O insurance,it explores the effect between the pay gap and enterprise risk-taking.This paper gets the following results:the increase of executive-employee pay gap and executive external pay gap will increase the level of enterprise risk-taking,and after introducing D&O insurance,there is a substitution effect between D&O insurance and executive-employee internal pay gap on enterprise risk-taking.This paper enriches the relevant research on the relationship between the pay gap and risk-taking,improves the research system of the effect of the pay gap and the influencing factors of enterprise risk-taking,deepens the understanding of the governance effect of D&O insurance company,effectively broadens the research scope of D&O insurance,and provides reference for the follow-up scholars to further study the corporate governance effect of D&O insurance.