Social Comparison, Pay Equity and State-owned Listed Firms Performance

Abstract

This paper traces the transition of pay gaps and its social comparison effects in China state-owned listed firms from the year of 2008 to 2016. We find that the series pay regulation methods promulgated by the central government have their restraining effects on the pay disparity in the firms. We also find that the pay gap between executives and employees does not affect state-owned listed firms performance. However, broadening the pay gap in executives team will result in non-cooperation and non-solidarity, and will eventually damage firms performance. Our results show that the following pay regulation policies should pay more attention to the pay gap in executives team.