Executive Compensation Gap,Internal Control Quality And Company Innovation

Enterprise innovation has always been an important topic.It’s not only the driving force of economic growth,but also the core competitiveness for a company.However,as decision makers of innovation in a company,executives have a high level of risk aversion and are reluctant to engage in innovation.Therefore,how to motivate them to engage in innovation is an important topic.This paper tries to explore the influence of executive pay gap on enterprise innovation.Considering that the core members of the executive team have a more significant impact on the decision-making,this paper focuses on the pay gap between CEOs and non-CEOs.Specifically,this paper will discuss three questions:First,can the executive pay gap promote corporate innovation? Second,what is the mechanism? Third,under different promotion opportunities,is there a significant difference in the effect?In order to answer these questions,this paper takes listed companies as a sample and conducts an empirical study.The findings are as follows:(1)The pay gap of core executives will significantly promotes corporate innovation input and output;(2)Internal control is the transmission mechanism of executive pay gap affecting enterprise innovation;(3)The pay gap has a significant heterogeneous effect under different promotion opportunities.The greater the opportunity for promotion,the stronger the incentive effect of the pay gap.In addition,the robustness test results also support the above conclusions.This paper expands the research on compensation incentive,and the conclusions provide empirical support for the innovation incentive role of executive pay gap.It provides a new idea to ease agency conflict and promote innovation level.