The Listed Company Management Power, Salary Gap And Company Performance Research

Executive compensation incentive of Listed Companies has always been an important area of corporate governance, and since the80’s of last century it has caught the attention of the academic community. In recent years there is a large amount of researches based on top management incentives, centered on incentive level, structure, influencing factors and incentive effect. Compensation incentive will produce the pay gap within the team, so does it affect the solidarity and cooperation within the top management team, as well as the performance of the company? Pay gap may generate sense of unfair, and influence their working attitude, and as a result firm performance would be affected. The existing studies in our country mainly talk about pay gap in top managers, and seldom pay attention to the pay gap between top managers and ordinary workers. And the existing studies mostly focus on two theories of pay gap, talking about one problem-which theory plays a leading role in the relationship of pay gap and firm performance? A new theory——the managerial power——has been researched in recent years, which indicates that managers would use their power to affect their pay, and abuse power for their personal gains, making compensation incentives itself as one kind of agency problems. So, how does the pay gap affect the performance of company in our country? Does it affect firm performance positively or negatively? And does the managerial power affect the relationship between pay gap and firm performance?This text studies compensation dispersion within TMT, and compensation dispersion between top managers and ordinary workers of listed companies based on the institutional background of China. First, the text Concludes the research findings both at home and abroad, and analyze the inadequacies of them, then talks about the applicability of the two theories-Tournament Theory and the Behavioral Theory-on the pay gap as well as the managerial power theory of China’s listed companies, and analyze if the managerial power would influence the incentive effect or bad effect of pay gap. And then the text uses the data of listed companies to test the relationship between pay gap and firm performance, as well as the effect of managerial power. This text not only test pay gap between TMT but also pay gap between top managers and ordinary workers. The test contains the linear relationship and curve effect between pay gap and firm performance, as well as the effect of managerial power. The conclusions include:first, the tournament theory plays a leading role in the relationship between pay gap and firm performance; second, there is not a significant curve effect between TMT pay gap, but to ordinary workers, the effect of compensation dispersion to firm performance is curve, which means the two theories both play a role in pay gap’s effect on firm performance. It shows that extending or reducing compensation dispersion blindly does no good to firm performance and circumstances should be paid attention to; third, the managerial power would not help to promote the performance of the company, and managerial power would not help to expand the incentive effect of compensation dispersion. So the managerial power should be controlled.