A Research on the Correlation between Compensation Dispersion and Business Performance of the Listed Companies in China
|School||Nanjing University of Finance and Economics|
|Keywords||Wage Dispersion Firm Performance Hysteretic Properties|
In mid-September 2008, the bankruptcy of the fourth-largest U.S. investment bank Lehman Brothers indicates that the U.S. sub-prime mortgage crisis has become an international financial crisis. In this crisis, there is much concern about the annual salary of top managers in the U.S. Company, in order to appease the anger of the public for some finance executives "Self-fat". The U.S. government announced a series of measures to restrict the annual salary of top managers. Coincidentally, the high pay of top managers has also been questioned by the public, which fully reflects the social sensitivity on this contradiction. The main reason is that people has different understanding about the relationship between pay-gap and firm performance. In company,as Top managers’salary is usually twice higher than managers in middle-level or lower,it’s hard to give a standard about how much pay-gap is suitable among top managers, what will the effect to the company’s performance,such as hysteresis quality? This is what we will investigate in this paper.Based on reviewing the academic document, First, observe and analyze the current situation of internal salary differences in China’s listed companies. Second, make theoretical analysis of the relationship between the internal salary differences and the company’s performance. Finally, make empirical research about the relevance between the internal salary differences and the listed company’s performance. The sample adopted in demonstration comes from the annals’data of Shanghai a share stock market during the year 2004-2008. By using multiple regression analysis, the research indicates that lager internal salary difference is propitious to improve company’s performance. also salary difference between Top managers and between Top managers and employees would have impact on company’s performance in future.This paper also indicated: The performance of listed companies is not depend on operating level of top managers, especially state-owned holding listed companies, but considerably depend on the government, policy support, as well as the relative monopoly. Therefore, the crux of the matter is to explorer internal pay gay from a larger level, and establishes enterprises executive pay system.