The Relationship Between Internal Control And Senior Executive Internal Pay Gap

In recent years,the social attention on executive compensation has become higher and higher,and the research on executive compensation has also become more and more plentiful.The reason is that the economic growth rate is too fast,leading to management and supervision of executive compensation cannot keep pace with the times,and there is a problem of uneven distribution of executive pay.In particular,the annual salary of the top executives of 66.161 million and the minimum salary of the executives of 4800 won the public's heated discussion and people's argument in 2007.The issue of pay gaps is increasingly worth studying.Internal control,as an indispensable link in the company's operation and management,affects the design of the company's compensation structure,the formulation of executive incentives,the distribution of internal resources,and other aspects.Therefore,this article boldly infers that there is a correlation between internal control and executive pay gaps.Based on the development of the existing social market,this paper studies the following research on the correlation between internal control and executive compensation.First,this paper defines the operating mechanism of internal control,the category of executives and the salary gap.The purpose is following up research without conflict with the classical theoretical research.At the same time,the basic theories,such as principal-agent theory,incentive and constraint mechanism,tournament theory,behavior theory and fairness theory,are discussed in the existing theory.Second,review the existing literature on the basis of related theories,and put forward the core hypothesis: internal control and the internal compensation gap between executives are positively related.Because only one article directly studies the relationship between the two,this paper has found a breakthrough from other research directions:(1)internal control can improve the investment efficiency and the two are significant positive correlation;internal control is also a significant positive correlation to the company performance,and the better the internal control is,the higher the performance of the company.(2)the efficiency of investment affects the internal compensation gap.Inefficient investment behavior will reduce executive compensation,and high efficiency investment will improve executive compensation.So the higher the efficiency of the investment,the higher the efficiency of the investment,the greater the internal compensation gap between the executives;the company performance affects the internal salary gap in the high management,and other research shows the public.When the compensation is allocated to the compan y,the performance level of the company is taken into account.The contribution of the executive to the performance of the company directly affects the internal salary gap of the executive.The better the performance is,the greater the salary gap between the executives.(3)the economic consequences caused by internal control are basically related to the reasons for the internal compensation gap between senior executives.Through the review of these documents,this paper holds that there is a link between internal control and the internal compensation gap between senior executives and the two is a positive correlation.Third,after the basic theory and literature review,the internal compensation gap is interpreted as an explanatory variable.Internal control is used as an explanatory variable and other variables are introduced as control variables.The research model is designed according to the requirements of empirical research.The descriptive statistics are carried out on the two listed companies in Shanghai and Shenzhen in 2005-2014 years.Sexual analysis and empirical test.From the perspective of internal control and internal compensation gap,the following problems are analyzed:(1)whether the internal control is related to the internal compensation gap and how the correlation is significant.(2)whether the quality of internal control is different and whether the impact of internal control index on executive pay gap will change.(3)whether the nature of property rights has an impact on the relation ship between internal control of listed companies and the compensation gap of executives.(4)whether the “Limited Pay Order” has an impact on the relationship between the internal control of listed state-owned enterprises and the internal pay gap of executives.The results of the study show that there is a significant positive correlation between internal control and executive pay gaps,and the higher the internal control quality,the greater the internal pay gap of senior executives,which is consist ent with the assumptions in this paper.According to the different nature of property rights,this paper examines in groups.The empirical results show that the internal control of private enterprises has a greater influence on the internal pay gap of seni or executives than that of internal control of state-owned enterprises.This paper believes that this is a state-owned company controlled by government compensation.In addition,this paper verifies whether there is any difference between the internal control of state-owned enterprises and the inspection structure of the internal pay gap of senior executives before and after the implementation of the “Limited Pay Order” policy.The results show that the internal control and internal pay of senior executives are prior to the implementation of the “Limited Pay Order” policy.The gap is not closely linked.After the implementation of the “Limited Pay Order” policy,the impact of internal control on the internal pay gap of senior executives is significantly positively correlated.The better the internal control is,the higher the internal pay gap of senior executives is.According to the analysis of this paper,this is considered to be due to Prior to 2009,the role of internal control in corporate management was not taken seriously.The company's compensation design system was not perfect,resulting in significant differences between the internal control and the executive compensation gap of senior executives before and after the implementation of the “Limited Pay Order” policy by state-owned enterprises.From this,it can be inferred that the internal control and pay structure design are more closely linked after the implementation of the “Limited Pay Order”.Based on this,the following suggestions are proposed:(1)The company should improve its internal control system and improve its internal control.(2)Establish a complete incentive compensation mechanism for senior executives,set up a reasonable executive compensation gap,and motivate executives to work more actively.(3)Strengthen the external regulatory power of enterprises and correct problems in the management of enterprises.