An Empirical Study Of Executive Compensation Gap Effect On Corporate Performance In Monopoly State-owned Enterprises

The problem of compensation gap has been concerned in western countries in the early 1980 s, the tournament theory and behavior theory are introduced to measure the effect of compensation gap of corporate performance successively. In our country, executive gap has always been the concern of all sectors of the society, especially the imbalance of executive compensation in monopoly industries and nonmonopoly industries. In recent years, employee compensation in the monopoly of state-owned enterprises, especially executive compensation grows too fast,which results in the compensation gap between executives and the compensation gap between executives and ordinary employees have expanded dramatically. However, there are relatively few studies on the research literature of the monopoly of executive compensation in state-owned enterprises.Based on the above considerations, this paper was set in China’s monopoly of state-owned enterprises, researching on the influence of executive compensation gap on corporate performance. Among them, executive compensation gap included the compensation gap between the executive within the team and the compensation gap between executives and ordinary employees. This paper firstly reviewed the relevant research literatures at domestic and abroad and then made a detailed explanation of the related concepts and theories and put forward four hypotheses based on the theoretical basis. Secondly, the variables were defined and four regression models were built according to the four hypotheses. Finally, we chose the monopoly of state-owned enterprises 2010-2014 years of data for the study sample, which removed some of the data not meet the conditions. SPSS 21 was used to verify the effect of executive compensation gap of corporate performance by descriptive statistical analysis and linear regression analysis. In the empirical research, before studying the effect of executive compensation gap of corporate performance, we firstly studied the impact of ordinary employee pay and executive compensation on corporate performance respectively and then considered the effect of executive compensation gap on the corporate performance. The research results showed that the ordinary employee compensation and executive compensation were positively related to the corporate performance and the gap between the executive team and the gap between the executive staff and the ordinary employee compensation gap were positively related to the corporate performance. The results also showed that tournament theory than behavior theory had stronger explanatory power of the compensation gap than behavior in the monopoly of state-owned enterprises and namely the greater the compensation gap, the higher the performance of the enterprise. Finally, the paper put forward policy recommendations that we should further improve the corporate executives appointment system, corporate executives employees compensation levels should be appropriate, compensation gap should be controlled in the reasonable range and we should improve the monopoly of state-owned enterprises executive compensation disclosure system.