Research On The Impact Of Top Management Team Pay Gap And Enterprise Value

Top managers, who generally are rare, irreplaceable and highly-valued, play a crucial role in the business development and value enhancement for the modern corporate. For a long time, pay incentive is the most common and effective way to motivate top managers. Currently, reasonable pay incentive has already become the key of stimulating top managers’ working enthusiasm and reducing their self-interest behavior and shirking behavior. Pay gap among top management team is fundamentally the reallocation of pay resources. And it can stimulate the sense of competition within the team and fully mobilize the enthusiasm and creativity of top managers.Internal supervision mechanism acts as a binding force executives appear to be earlier than the pay mechanism. Internal supervision mechanism is a protection of all business practices and regulations. Meanwhile, with the development of modern enterprise system and the improvement of relevant laws and regulations, the role of internal supervision is also increasingly prominent in recent years.Based on the actual situation in China, the first study is about the internal mechanism of pay gap within top management team and corporate value. And the second study is about the influence of the relationship between pay gap within top management team and enterprise value from the perspective of empirical. Finally, the listed companies are divided into non-state-owned listed companies and listed companies. The final study is about the comparative study of these two types of listed companies. This test is trying to improve the existing theory of pay gap and construct the actual pay gap within top management team.The conclusion include:(1) Overall, the pay gap within top management team of Chinese listed companies is consistent with the Tournament Theory. In other words, there’s significant positive correlation between the pay gap within the top management team and enterprise value;(2) The internal supervision boosts the tournament incentive effects of the pay gap within the top management team. In strong internal supervision companies, the positive correlation will be strengthen, and in companies which internal supervision is relative lack, the positive relationship will be weakened;(3) In state-owned listed companies, the positive correlation is weaker than that in the non-state-owned listed companies;(4) In the state-owned listed companies, the boosting force of internal supervision is weaker than that in the non-state-owned listed companies.According to the research results, this paper puts forward the following suggestions:(1) The enterprise should moderate widening executive compensation gap within the team to fully mobilize the enthusiasm of executives and improve enterprise value;(2) The enterprise should adopt the internal force to fully guarantee the implementation and effect of the salary system. The enterprise should reduce executive remuneration and self-interest;(3) The enterprise should be based on the actual control of the nature of their own for the development of the salary system and supervision system. State-owned enterprises should focus more inclined to strengthen internal supervision. While the non state-owned enterprises should more inclined to moderate widening of top management team Pay gap, in order to fully and effectively improve the value of enterprises.