Research On The Influence Of Executive Pay Gap On Inefficient Investment

For modern enterprises,investment is an important part of sustainable development in the future.On the one hand,efficient investment can disperse the risks of the enterprise and obtain benefits from it;on the other hand,the enterprise can obtain the core competitive advantage in the industry competition,which is conducive to the long-term development of the enterprise in the future.But at present,the investment level of Chinese enterprises is relatively low,and the inefficient investment phenomenon is widespread,which not only makes the resource mismatch of enterprises,causes the waste of resources,but also brings losses to shareholders,affects the enterprise value,hinders the survival and development of enterprises.How to promote the effective investment of enterprises has become the focus of academic circles.Senior management team is the main decision-maker of the company’s resource allocation,which can most directly grasp the development direction of the company.The establishment of salary contract is an effective means to motivate managers.Its original intention is to encourage the management to make investment decisions conducive to the long-term development of the enterprise.However,in recent years,the phenomenon of sky high salary has emerged in China,and the salary contract is unreasonable frequently As a result,the incentive effect of the compensation contract is restrained,the management is affected by the unreasonable compensation contract,the principal-agent problem under the separation of the two rights of the enterprise itself,and the existence of asymmetric information,the management makes unreasonable investment decisions that may deviate from the best investment of the enterprise,and makes inefficient investment to meet the private interests Damage the value of enterprises and shareholders.How to design a scientific salary contract,maintain a reasonable salary gap and give play to the incentive role of salary has become an urgent problem to be solved.At present,scholars at home and abroad focus more on the impact of salary incentive on enterprise performance,and pay less attention to the intermediate link of investment.There is less research in the field of investment.Among these only research results,scholars draw different conclusions.In addition,most scholars study the linear relationship,but ignore the interval effect,and fail to reach a consistent conclusion.Based on the above background,this paper selects the data of A-share listed companies from 2013 to 2019 as the research sample,uses empirical research method,literature research method,qualitative and quantitative research method and other research methods,through combing and summarizing the previous literature,puts forward research hypotheses based on the principal-agent and information asymmetry theory,tournament theory and equity theory.In the empirical part,this paper uses Richardson(2006)model to measure the inefficient investment,and constructs an empirical research model of executive internal pay gap and inefficient investment,in order to explore the mechanism of executive internal pay gap on inefficient investment,and on this basis to explore the heterogeneity analysis of property rights nature and Marketization degree,and carry out the corresponding group regression,so as to enrich the research Research in related fields.Based on this,this paper draws the following conclusions:(1)the internal pay gap between executives and inefficient investment is not a simple linear relationship,but presents a "U" type relationship,that is,there is an interval effect.When the pay gap is opened,the inefficient investment will decrease with the increase of the gap,and the pay gap plays an incentive role;when the pay gap continues to increase,the inefficient investment will decrease.On the contrary,investment has increased,which has a negative impact on enterprises.(2)In non-state-owned enterprises,this "U" type relationship will be more significant.(3)The higher the degree of marketization,the more significant the U-shaped relationship will be.In this regard,the paper puts forward the following suggestions for China’s enterprises,government and relevant regulatory departments:(1)enterprises should improve the salary system according to their own actual situation and set a reasonable salary gap;(2)deepen the reform of state-owned enterprises and strengthen internal control;(3)improve the salary information disclosure system;(4)promote the marketization process and strengthen the external regulatory mechanism.