Research On The Influence Of Internal Salary Gap On Corporate Risks

In the 16 th century the separation of ownership and management in Italy’s companies, this marks the principal-agent relations. And how to deal with the principalagent relationship is also scholars has been studying the subject. Develop executive compensation as part of corporate governance,Its incentive effect to be recognized as a valid solution to the agency, It has already attracted widespread attention at home and abroad and expand research. Whether theorists or practitioners of executive compensation have been gradually formed a mature research system, But the research is still in constant expansion. At present, foreign mainly through the combination of the pay gap and the company’s performance, in order to study the impact of the development of executive compensation on company performance, Then they were from the gap between internal and external executive compensation, performance of the company’s different metrics, based on different theoretical assumptions study the correlation between them. Domestic scholars on executive pay later than abroad, Most based on tournament theory and behavior theory at present, then use of A-share listed company data analysis association between them at the same time. After continuous research, China’s listed companies in the development of the salary structure system has fully considered the relevant conclusions, the incentive effects on performance of the company considered in it, and to be widely used in practitioners. However, with the expansion of the pay gap, on the one hand, it is possible moral hazard, executives make unfavorable decisions to get high salaries, resulting in high performance and high returns, but high-yield also with high risk. On the other hand, expansion of the pay gap,internal staff will produce unfair psychological, thereby negatively lazy mood, serious situation,they make selfish self-serving behavior, increasing the risk of the company.Until November 2015, the central bank cut interest rates twice a year, the impact of inflation and the national macro-control on the real estate market, resulting in China’s real estate industry has suffered the most severe test since 2009. So, in this tough economy, What’s the influences between pay gap of senior management team and firm risk? Real estate listed companies in corporate governance process, In developing structure of executive compensation system whether the company should consider the risks associated with the company’s performance with it? Because of these questions,this paper start to explore the influences between pay gap of senior management team and firm risk through theoretical research and empirical analysis after reading the relateliteratures home and abroad. It is based on the current domestic economic situation and development of the market and with the data of real estate companies. At the end of the article draw some conclusions and put forward some relevant suggestions, hoping to provide some reference for corporate governance of real estate companies in China.First of all, this chapter expounds the background and the research questions of the paper. Describes the purpose of this research, the research significance, research ideas and research methods, and reviews the content and framework in the article; and from influence factors on pay gap, influence factors on the company’s risk, pay gap and company performance, pay gap and firm risk reviews the relevant literature both foreign and domestic. In the study of the relationship between executive pay gap and corporate risk is began to study abroad in recent years, and not many research in domestic. It has been reviewed after summarizing the literature.Secondly defines the main conceptions involved in this paper, these conceptions include: senior managers, executive compensation,pay gap and firm risk. It makes the contents of this paper more clearly after every conception is defined. And respectively elaborated principal-agent theory, tournament theory, behavioral theory and risk theory;Among them, the principal-agent theory is the study of corporate governance issues on the basis of the start point, the tournament theory, behavioral theory and risk theory was able to explain the effect of a good executive pay gap for internal corporate risk, and also tends to affect the conclusions unanimously.Then, based on the theoretical analysis also proposed executive pay gap between internal corporate risk was positively related research hypotheses. Selected 148 real estate companies 2010-2014 empirical data from GTA database(CSMAR),excluding non-compliance data then left a total of 117 listed companies with 585 data. The defined the study variables, internal executive pay gap as explanatory variables, according to Chinese scholars ofen used,choose the top three executives a total remuneration of executive compensation and corporate executives to measure the gap between the total internal pay gap. Risk is interpreted as a variable, Since the main influence on the executive pay gap inside the company’s risk, so the company will be divided into financial risks and risk management risk, While the size of the company, revenue growth, concentration of ownership, annual dummies like as a control variable.Empirical research according to the set model, Respectively, to complete the descriptive statistical analysis of the variables, the explanatory variables and the control variables and the dependent variable correlation analysis, regression analysis and test results, testthe stability of the model.Finally, based on theoretical research and empirical research in front, draw the conclusion which the real estate executives of listed companies pay gap for internal company risk is positively related. At the same time put forward two proposals for conclusions:(1) In the current severe economic situation, as the real estate industry, in order to survive, it is necessary to keep pace with the times, while within the company when setting compensation system of governance, not only to consider the original incentive pay on the company’s performance should also consider their impact on the company’s risk;(2)On the existing salary structure system optimization good salary adjustment brought short-term incentives and long-term incentive effect, balance the relationship between company performance and they bring the company between risk;(3) Improve the transparency of the real estate company executive compensation disclosure. Finally, possible future research directions.