Research On The Impact Of Executive Pay Gap On Corporate Social Responsibility

The performance of corporate social responsibility has significant effect in the sustainable development of enterprises in today's profoundly changing economic environment.The goal of the enterprise has been changed from the maximization of profit to the maximization of the interests of the company's stakeholders,and only through a series of social responsibilities such as improving product quality,paying attention to the treatment of employees and reducing environmental pollution,can the overall interests of the company be maximized.Based on this,the government,consumers and enterprises themselves all attach great importance to how to improve corporate social responsibility.Another major concern in the field of corporate governance is how to design reasonable compensation to motivate executives to better serve the company and make them strive to improve the overall performance of the company.Reasonable compensation incentive is an important corporate governance mechanism that can solve the principal-agent problem and make the utility of executives and owners converge.The compensation system includes both the compensation level and the compensation structure,and the design of the compensation structure is more important to some extent(Jensen&Murphy,1990),pay gap is an important content of pay structure design.The size of the pay gap will generate different incentive effects on the executives and thus change the behavioral decisions of the executives.By controlling the pay gap within a certain range,executives can be effectively encouraged to make decisions that pay attention to the long-term development of the enterprise,and executives will pay attention to the social responsibility as one of the strategic objectives of the enterprise,so as to effectively promote the performance level of corporate social responsibility.Based on the above derivation,this paper will conduct an in-depth study on the relationship between executive compensation gap and corporate social responsibility.As social responsibility decision-making is closely related to corporate internal control,and senior executives are the main designers of the internal control system,this paper introduces another important link of corporate governance--internal control to explore its role in the executive compensation gap and social responsibility.The author makes a group study on the property right nature,the degree of product market competition and the power of management,the correlation between them is further analyzed,so as to make an extended study on the relationship between pay gap and corporate social responsibility.In addition,in order to prove that the implementation of social responsibility can play a positive role on enterprises,this paper also tested the relationship between social responsibility and enterprise value.From the perspective of the executive compensation gap which is one of the corporate governance mechanisms,this paper explores its' impact on corporate social responsibility,an important corporate strategy.Through the financial samples of a-share listed companies in Shanghai and Shenzhen from 2009 to 2018,the effects of internal and external pay gaps on CSR were tested respectively.Meanwhile,the economic consequences of CSR were also examined in this paper.The research results are as follows:(1)The internal and external pay gap between executives has a positive incentive effect on CSR,and has passed the corresponding robustness test.(2)The gap between the internal and external compensation of senior executives partly promotes corporate social responsibility through internal control,an intermediary factor.(3)By dividing the nature of property rights,it is found that the positive incentive effect of internal and external pay gap on CSR is more obvious in the sample of state-owned enterprises.(4)By dividing the degree of competition in the product market,it is found that the gap between internal and external remuneration of executives is more able to promote the improvement of corporate social responsibility in enterprises with fierce competition in the product market.(5)By dividing the power of management,it is found that the gap between the internal and external remuneration of executives is more conducive to the improvement of corporate social responsibility in enterprises with weak management power.(6)Corporate social responsibility can improve corporate market value and long-term performance.This paper provides a new way of thinking for improving the corporate governance mechanism and promoting the level of corporate social responsibility,which can serve as a useful reference for the corresponding policy makers.