Research On The Influence Of Internal Salary Gap On Enterprise Risk-Taking

Improving the efficiency of governance and reducing agency cost are the core concepts pursued by modern enterprise management.As the actual managers of enterprises,executives shoulder the important task of advancing enterprises and are the cornerstone of the establishment and development of enterprises.As an important part of corporate governance,executive compensation incentive system is an effective way to alleviate the problem of shareholder and executive agency,which has always been the focus of theoretical and practical research.By setting the salary gradient in order to enhance the enthusiasm of the executive level to manage the enterprise,the enterprise can effectively reduce the agency cost while promoting the efficient development of the enterprise.However,when the compensation gap between the executive level is too large,it may lead to unfair feelings among the members,which lead to the reverse selection of managers and increase the agency cost of the enterprise.At present,the existing literature mainly focuses on the effect of executive compensation incentive on corporate performance,but there is less research on the role of executive compensation gap on corporate risk bearing.Based on principal-agent theory and tournament theory,behavior theory and prospect theory,this paper takes 1327 listed companies from 2009 to 2018 as the research sample.Manually collate and calculate the absolute internal compensation gap and relative internal compensation gap of enterprise executives.Based on the volatility of enterprise profits,we measure the level of enterprise risk-taking.The effect of internal compensation gap on risk-taking level of heterogeneous enterprises and the effect of regional marketization and equity behavior on the relationship between internal compensation gap and enterprise risk-taking level is tested.The conclusion of the study shows that:(1)the internal salary gap of senior executives is negatively related to the level of enterprise risk taking.Based on the outlook theory,individuals will make different choices according to their own state differences when they face risk decisions.When the compensation treatment of core executives is obviously higher than that of other executives,core executives tend to maintain their vested interests,reduce individual risk tolerance and choose low-risk investment projects,so as to reduce the level of enterprise risk taking,which is in linewith the deterministic effect in outlook theory.When the pay gap between core executives and other executives is small,core executives tend to choose high-risk and high-yield projects in order to obtain higher compensation treatment to increase the level of enterprise risk taking,which accords with the reflection effect in prospect theory.(2)State-owned enterprises CEO have higher decision-making power.When their absolute compensation is significantly higher than that of other executives,they tend to avoid risk,choose low-risk investment projects to reduce the level of enterprise risk taking,and the core executive team of non-state-owned enterprises has higher decision-making power.When their relative compensation is higher,they have a tendency to avoid risk and choose low-risk investment projects to reduce the level of enterprise risk taking.(3)The degree of marketization can strengthen the negative relationship between the internal salary gap of executives and the level of enterprise risk taking,that is,the higher the degree of regional marketization,the more significant the negative effect of the internal salary gap of executives on the level of enterprise risk taking.(4)Compared with state-owned enterprises,equity incentive can significantly improve the negative relationship between internal pay gap and risk-taking level of non-state-owned executives,and the relationship between ownership concentration and enterprise risk-taking level is "U shape ",and the increase of equity concentration can strengthen the negative effect of internal compensation gap on enterprise risk-taking level.(5)Further,the expansion of compensation gap within executives will dramatically increase the performance level of enterprises,indicating that the tournament theory is still applicable in Chinese enterprises at present.