The Empirical Analysis Of The Compensation Gap And The Listed Firm's Short-term And Long-term Performance

With the development of Chinese economy,the phenomenon of income distribution inequity is becoming more and more serious.Furthermore,the income gap has been expanding,including the income gap between urban and rural areas,and the gap in regions,industries or enterprises.However,the global financial crisis happened in 2008 with the macroeconomic downturn.Executives still enjoyed high returns,on the contrary,the general staffs were less paid or even unemployed,and the pay gap between executives and employees of listed companies became more and more obvious.In recent years,with the constant exposure of executives' high pay,limited remuneration policy has appeared on the stage in China,in order to control the trend of widening income gap,and to ensure a reasonable income distribution order,which is key point of the reform of the income distribution system in China.The thought of guiding the construction of socialist market economy in China has been shifted from giving priority to efficiency while taking equity into consideration to paying attention to fairness and efficiency,and the second step allocation paying more attention to fairness.There are two scenarios for studying the outcome of the pay gap.One can use tournament theory to explain that high pay gaps lead to high performance.Because the high salary gap will let people make more efforts in the pursuit of a higher position and salary level and then enhance corporate performance.At the same time,the high salary gap will also filter the workforce,which means that winners in the tournament will stay in business and the losers will be screened out of the business.High salary can also attract other talents.On the other hand,the high salary gap may harm the internal fairness and undermine the cooperation within the enterprise,which can be explained by the relative deprivation theory or the fair theory.The compensation gap within the firm is a double-edged sword for corporate performance,and the compensation gap will affect the degree of job satisfaction and work effort,thus affecting the performance of the company.If the pay gap is too small to motivate,the high pay gap leads to a sense of injustice and causes employees to lose motivation for hard work in contrast.Under the background of deepening the reform of the economic system and improving the income distribution policy in China,it is of practical significance to study the salary gap between the top managers and the employees.Through the study of the relationship between internal pay gap and firm performance,this paper provides support for scholars,managers and policy makers about the research and practice of pay gap,corporate governance and strategic human resource management.Whether to limit executive pay or increase the salary level of general staff's,to ensure the rationality of the pay gap between executives and employees can alleviate the contradiction between the rich and the poor in society,and maintain social stability.Besides,if the enterprise decides to adjust salary gap by increasing the average staff salary,it can increase consumption ability,promote consumption expectation,increase consumption desire,expand consumption of large residents,and then promote economic growth..This paper consists of five parts.The first part is the introduction,combined with the present situation of practice and research,to expound the significance of the study,put forward the framework of this article,and explain the innovation points.The second part is the literature review,including the related theories and the related literature review of the relationship between the salary gap and the short-term and long-term performance of enterprises.The third part is the research design,defining the related concepts,and putting forward the research hypothesis,sample selection,research model and the definition and measurement of variables.The fourth part is data analysis,through the correlation and regression analyses among variables,verifying the relationship between the pay gap of executives and employees and the listed enterprise short-term and long-term performance,with the moderating effect of industry.The last part is the conclusions and recommendations of the study.The conclusions of the empirical research are analyzed,relevant management recommendations are put forward,and the deficiencies of the study and the improvements of the subsequent studies are summarized.The sample of the study selection analysis included the publicly traded firms listed in Chinese A share market during the years 2009 to 2012.In the course of the study,the enterprise performance is divided into two types:short-term performance and long-term performance trend.This article is to analyze the relationship between the pay dispersion and the enterprise short-term performance and the long-term performance trend respectively,and to verify the moderation effect of industry.The current domestic study of pay dispersion on the business performance are about the pay dispersion among the top management team,or about the impact of the current performance,or lag the influence of lag phase.This paper argues that the impact of pay dispersion between executives and employees on short-term performance and long-term business performance should be different,and the different types ofindustries will also affect the incentive effect of the pay gap.Empirical tests are carried out.Although existing studies show that executive employee compensation gap may have a positive relationship with short-term business performance,or inverted U shape relationship,the study are concentrated in the manufacturing sector,and the study of all listed companies also mostly excludes data in finance industry.In this paper,nine industries of listed companies are analyzed,and these enterprises are divided into two categories according to the industry concentration degree of listed companies.The research results will be of some reference value to the establishment of enterprise salary and the national salary policy.