Research On The Relationship Between The Compensation Gap Of Listed Company And Future Performance

The issue of compensation design of intra-companies has become a top issue which is concerned by the circle of theory and practice since 1980s. This is because the problem of compensation gap has a direct impact on the working mood of inter-company employee, thereby effects the performance of the whole company. But most of the existing researches only discuss the relationship between the compensations of executives and company performance. The existing researches about the relationship between compensation gap of intra-companies and company future performance are little relatively. Therefore, the research to the relationship of compensation gap and company performance and the specific application environment can not only advance the development of the compensation theory of our companies in theory, but also understand and evaluate the reform of compensation system of our companies objectively. It can guide the compensation decision and staff management scientifically and has important theoretical and practical significance.This paper selects the data of A share market from listed companies which are listed in Shanghai Stock Exchange and Shenzhen Stock Exchange from 2005 to 2008, uses the method of combining the normative research and empirical research, researches the influence of compensation gap of intra-companies on the company future performance from the two different aspects of the compensation gap between executive management team and between executive management team and ordinary workers.The results of empirical analysis show that both the compensation gap between executive management team and the compensation gap between executive management team and ordinary workers play the role of enhancement to the company future performance. This result supports the tournament theory and show that tournament theory has been an available theory which explains the influence of compensation gap (including the compensation gap between executive management team and the compensation gap between executive management team and ordinary workers) of intra-listed companies in China on company future performance.The main innovations of this paper are: 1. It not only consider the compensation gap of the executive management team, but also consider the compensation gap between executive management team and ordinary workers and can reflects the overall content of compensation gap.2. The content of the paper is the research between the compensation gap and company future performance. The influence on the relationship between them stretches the time, and enriches the salary theory.