Top Manager's Pay Gap And Inefficient Investment

As an integral part of the executive compensation contract,the original intention of the top manager's pay gap is to stimulate the management and alleviate the principal-agent problem.Therefore,how to establish a sound and effective compensation incentive system and make the top manager's pay gap play its positive incentive role has become one of the hot issues to be solved urgently.The problem of inefficient investment is widespread,the improvement of investment efficiency will increase the value of the company,has far-reaching significance for the long-term development of listed companies.The core of modern corporate governance is to solve the principal-agent problem,and the agency cost is one of the reasons for the inefficient investment.Internal control plays an important role in any organization,unit and even the listed company.The effective play of internal control will make the operation and development of the listed company enter a virtuous circle.With the vigorous development of market economy,the scale of institutional investors in China has become larger and larger,and has gradually become the main investors in the securities market.Therefore,the effect of corporate governance brought by institutional investors should not be underestimated.In this paper,using the empirical approach,literature research method,normative approach,quantitative analysis method,qualitative analysis method and others,based on the comb in the literature summary,the tournament theory,social comparison theory,principal-agent theory,asymmetric information theory and stakeholder theory put forward the theoretical hypothesis on the basis of analysis,the selection of a series of variables to construct on the impact of top manager's pay gap on the efficiency of investment model to empirical research to explore the top manager's pay gap for the inefficient investment.And on this basis to explore the mediation effect of agency cost,the regulating effects of internal control,institutional ownership and property rights.So as to enrich related research for our country's listed companies pay system reform,to enhance the efficiency of investment,perfecting the internal control and provide reference for the effective role in the institutional investors governance,and also provide reference for the reform of state-owned listed companies.This paper takes Chinese A-share listed companies from 2013 to 2017 as the overall research samples for empirical test.The research results are as follows: the effect of the top manager's pay gap on inefficient investment is "U-shaped",which has been verified in both over-investment and under-investment.The mediating effect of top manager's pay gap on inefficient investment through agency cost is verified in both over-investment and under-investment.Internal control can significantly weaken the "U-shaped" influence of the top manager's pay gap on the inefficient investment,which is mainly reflected in theover-investment.Internal control can help reduce the promoting effect of the excess top manager's pay gap on the inefficient investment.Institutional shareholdings can significantly weaken the "U-shaped" influence of the top manager's pay gap on the inefficient investment,which is mainly reflected in the over-investment.Institutional shareholdings can help reduce the promoting effect of the excess top manager's pay gap on the inefficient investment.The property right nature will affect the "U-shaped" influence of the top manager's pay gap on the inefficient investment.In China's listed companies,the "U-shaped" influence of the top manager's pay gap on the inefficient investment is more obvious in the non-state-owned listed companies.This article from the perspective of more micro to top manager's pay gap as the breakthrough point,comprehensive study to explore the influence of top manager's pay gap on inefficient investment.And for the first time the agency cost,internal control and institutional shareholdings into the top manager's pay gap research framework of the impact of the inefficient investment.This paper make a more comprehensive analysis of the top manager's pay gap for the inefficient investment,and provide new evidences on how to improve the level of the governance of listed companies.