China's Listed Companies In The Pay Gap Between Research And Business Performance Relationship

With the development of market economy, a number of listed companies are increasing. The management of executive pay has become more and more important. People become to concern more of the pay gap between the executives and staff. Whether between the corporate performance and the internal pay gap have the relationship. If they have, it is positive or negative. Whether the listed companies of the executives pay gap is reasonable, the pay gap between the executives and the employees is appropriate at this stage. This paper collect Shanghai and Shenzhen A-share listed company data. Verify the relationship between the pay gap and the corporate performance by multiple regression analysis, which provide a theoretical basis for the governance of listed companies.Firstly, this paper focuses on two important theoretical about pay gap: the Tournament theory and the Behavior theory. The Tournament theory is about that the pay gap and the corporate performance have the positive relationship. The behavioral theory has the opposite meaning. Then review the current development of these two theories in our country and other countries.Secondly, define the explanatory variables and the dependent variable, and select the corporate performance indicators return on assets (ROA) as the dependent variable. Respectively, select the executives within the pay gap, pay gap between executives and employees, the proportion of independent directors, firm size, state-owned shares, and proportion of ownership concentration as explanatory variables. According to the selected variable this paper choose the raw data, and design the six multiple regression models.Thirdly, distinct the data by industry and get the descriptive statistics, Then we have an intuitive understanding about the pay gap within the corporate executives and the pay gap between executives and employees. Compare financial listed companies pay gap with the other industry listed companies pay gap, and found that the financial listed companies pay gap is too large. Then remove the financial listed companies. Analyze the other listed companies by the multiple regression analysis found that the pay gap within the executives has a positive correlation with the corporate performance, and the pay gap between executives and employees also has positive correlation with the corporate performance. So this is in line with the tournament theory. The results for the other variables: ownership concentration has a positive effect on corporate performance and has an negative effect on the pay gap; Proportion of independent directors has no significant correlation with the corporate performance and the pay gap; Corporate size has a positive correlation with the corporate performance and the pay gap; the proportion of state shares has a U-shaped relationship with the corporate performance and the pay gap.Finally, according to the present situation of the executive compensation management of the listed companies, this paper makes some policy recommendations from internal control and external supervision.