Research On The Influence Of Executive Pay Gap On Inefficient Investment In State-owned Manufacturing Enterprises

The ultimate goal of the enterprise is to maximize the value,the realization of it greatly depends on whether the investment activities are effective.However,as the current capital market in China is still not perfect,information asymmetry and principal-agent problem are ubiquitous,and most enterprises have the problem of inefficient investment.Especially in state-owned enterprises,owing to the absence of owners,the principal-agent relationship becomes more complex and inefficient investment is more common.And state-owned enterprises play an important role in our economic sphere.It's necessary to maintain state-owned enterprises stable and healthy development.Executive compensation is an important bridge between owners and management,alleviating the agency problems and improving the effectiveness of investment decisions.At the same time,the current research on executive incentives and inefficient investments is mostly confined to executive compensation levels and equity incentives,and there are few studies on executive compensation structures involving pay gaps.Therefore,based on the above background,this thesis attempts to explore the impact of the executive pay gap on inefficient Investment.This thesis takes the state-owned manufacturing listed companies from year 2013 to 2017 as the research sample,and takes tournament theory,behavior theory and manager market theory as the theory foundation.First,theoretically analyzing the direct correlation between executive internal and external pay and inefficient investment,and based on this,the relationship between the interaction and inefficient investment is analyzed from a comprehensive research perspective.Moreover,in the process of analysis,considering the current conditions of unbalanced regional development in China,this thesis introduces the level of economic development as a moderating variable,and makes a comparative analysis of the impact of executive pay gap on inefficient investment under different levels of economic development.Then,putting forward the relevant research hypotheses,and building empirical models to verify.Finally,drawing the conclusions.The study finds that there is a U-shaped relationship between executive internal pay gap and inefficient investment,while executive external pay gap can restrain inefficient investment,and the interaction between the two has a significant negative correlation with inefficient investment.What's more,the research shows that,compared with developed areas,executive pay gap has a more significant impact on inefficient investment in backward areas.The innovation of this thesis lies in: focusing on the correlation between executive internal and external pay gaps and inefficient investment,and providing a double consideration of executive pay gap,and deeply comparing the differences in the executive pay gap on inefficient investment between developed areas and backward areas.It not only enriches the research results of executive compensation incentive and inefficient investment from theoretical level,proposes a new research perspective,but also provides reasonable suggestions for the salary design and avoiding inefficient investment of state-owned listed companies in China.