Who Is Encouraged by Pay Dispersion in State-owned Enterprises?
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| Title | Who Is Encouraged by Pay Dispersion in State-owned Enterprises?
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| Author | Wenjing Li and and Yuming Hu |
| Organization | School of Management, Jinan University |
| Email | tliwenjing@jnu.edu.cn |
| Key Words | Pay Dispersion; Managerial Power; Firm Performance; Investment Efficiency; Total Factor Productivity |
| Abstract | Using the sample of state-owned listed firms in manufacturing industry from 2003 to 2010, this study examines the different encouraging effect of pay dispersion on top management and employee. Our results indicate that pay dispersion is positively related to firm performance and performance from operation. Further analysis suggests the higher pay dispersion, the less efficient corporate investment. Moreover, managerial power is positively associated with pay dispersion. Taken together, pay dispersion doesn’t motivate top management in SOEs and is the result of managerial power. Pay dispersion is positively linked to firm total factor productivity, and the relation only exists in the subsample of low pay dispersion. Generally speaking, we provide the evidence that pay dispersion is more likely to encourage employee in SOEs when pay dispersion is low, but the relation doesn’t exist when pay dispersion is high. When pay dispersion is determined by managerial power to certain extent, it seldom encourages top management. |
| Serial Number | WP366 |
| Time | 2012-09-18 |
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