Research on the Effect of Salary Gap on the External Financing of Listed Companies in China

Weak financing channels for listed companies have been plagued by the development of China's real economy.The expansion of financing channels is the main core issue of capital structure research.It plays a key role in the improvement of the company's financing capacity,the expansion of the company's production and operation scale,the stability of the company's growth,and the company's response to changes in the external environment in order to achieve sustainable development strategic planning goals.Because endogenous financing is limited by the company's profitability and scale,and it takes a long time to raise funds,the academic and practical circles have been paying attention to how to effectively and reasonably carry out the company's external financing activities,which mainly focus on debt financing and equity financing research.At present,China's economy is in a transition stage,and the financial system and capital market need to be perfected.Commercial credit financing can effectively alleviate corporate financing pressure,broaden corporate financing channels,and promote the use of company funds.It has become an important external financing method for companies.It can play an important role in reducing the company's financing constraints and optimizing capital management.Therefore,this book includes commercial credit financing as a source of external financing for further research.

Due to the separation of ownership and management rights of modern companies,the principal-agent problem has arisen between resource owners and resource operators（Jensen and Meckling,1976）.The validity of the compensation contract can be used as a corporate governance mechanism to resolve the principal-agent problem.The scientific and rational formulation of salary gaps is an important research content of the company's salary incentive mechanism,and it is also the basis for judging whether the company's salary policy is effective and feasible.The salary gap will affect the enthusiasm of the company's management and employees,and then affect the improvement of the company's performance,leading to the information of the company's debt repayment,operation,profitability and development capabilities transmitted to the company's investors,creditors,suppliers and other stakeholders in the capital market affected.It will ultimately affect the effectiveness of the company's external financing.However,at present,there is still a lack of research on the impact of salary gaps on the company's external financing,and the research on the incentive effects of salary gaps in academia still lacks a unified conclusion.Further research verification of effect of salary gaps on the company's external financing channels is need.

At present,the research scope of salary gap and external financing still lacks an authoritative and consistent definition,and existing research rarely considers the impact of salary gap on commercial credit financing.Therefore,this book is based on tournament theory and behavior theory,combines agency theory and corporate governance theory,systematically reviews existing research literature,and explores the research space of this book.Secondly,based on the analysis of the development gap of China's listed companies'salary gap and the source of external financing channels,this book explores the necessity of the effect of salary gap on external financing,and makes a theoretical analysis of the relationship between them.Thirdly,the research on the impact of salary gap on external financing from three dimensions:the first dimension is the impact of the salary gap on debt financing; the second dimension is the impact of the salary gap on commercial credit financing; the third dimension considers the impact of the salary gap on equity financing.Finally,based on the empirical results of this book,specific countermeasures and suggestions are proposed.

Through the above studies,the main conclusions of this book are：

（1）The empirical test of the impact of China's listed company salary gap on debt financing.

The research results show that:in terms of debt financing level,the higher the relative salary gap between external and internal executives of the company will significantly reduce the debt financing ratio.In terms of debt financing term,the median external salary gap of the company's executives and employees,the relative salary gap of the senior management teams and the executives-employees and the long-term debt ratio shows a significant negative relationship.In terms of debt financing methods,the salary gap between external and internal executives and employees of the company and long-term bank loan ratio show a significant positive relationship.The empirical test further distinguishes the nature of the company's property rights.State-owned enterprises can strengthen the negative effect of the median external salary gap of the senior management teams,the executives-employees and the debt financing ratio; the median external salary gap of the executives-employees and the relative salary gap of the executives-employees affect the long-term debt ratio.The negative effect has been strengthened,which indicates that the higher the salary gap in state-owned enterprises,the senior managements will establish their own profit-making mechanism,reduce the company's debt financing,and improve the convenience of their salary manipulation.Companies with a high degree of equity balance will exacerbate the negative effect of the salary gap between external and internal executives and employees on longterm debt ratios,and the positive effect of the median external salary gap of senior management teams on long-term bank loan ratio will be weakened.In addition,considering the degree of competition in the industry and using the degree of monopoly to classify,it finds that industries with a higher degree of monopoly will enhance the negative effects of salary gaps between external and internal executives and employees on debt financing ratios and long-term debt ratios,but the negative effects of salary gaps between external and internal senior management teams and employees on debt financing ratios and long-term bank loan ratio will be weakened; divide the company registration place into the eastern and coastal regions and the central and western regions,and finds that the negative effects of the median external salary gap of the management teams,the relative salary gap of the executives-employees on the debt financing ratio is strengthened in the economically developed eastern and coastal regions,the negative effect of the median external salary gap and the relative salary gap between executives and employees on the long-term debt ratio is intensified,and the positive effect of the median external compensation gap of the senior management teams on the long-term bank loan ratio is strengthened.

（2）Empirical inspection shows that the increase in the salary gaps between the company's senior management teams,executives and employees will reduce commercial credit financing.

State-owned companies will exacerbate the negative effects of the salary gaps and commercial credit financing; companies with a high degree of equity balance will weaken the negative effects of the median external salary gap for executives-employees and commercial credit financing; companies in highmonopoly industries,the negative effect of the relative salary gap of senior management teams and the commercial credit financing level will be strengthened; in companies with better economic development,the negative effect of the relative salary gaps between senior management teams and executives employees and the commercial credit financing level will decrease.

（3）Empirical test of the impact of China's listed company salary gap on equity financing.

The research results show that the listed company's salary gap and equity financing level have a negative effect.As the company's external and internal salary gap increases,the company's equity financing level will decrease.Empirical test further research finds that in the state-owned companies,companies with higher monopoly levels and companies in regions with better economic development,the negative effect of the relative salary gaps of the senior management teams and executives-employees on equity financing level will be strengthened; In companies with a high degree of equity balance,the negative effect of the relative salary gaps of the senior management teams on equity financing level will decrease.

To sum up,based on the theoretical analysis and empirical test of the impact of China's listed company's salary gaps on external sources of financing,the main policy recommendations in this book are:it should improve the construction of laws and regulations related to salary incentives,and improve the effectiveness of laws and regulations; it should improve the capital market the company's commercial credit financing related specifications,and improve the commercial credit supervision system,and purify the commercial credit financing environment; it should set reasonable post salary standards,and comprehensively consider internal and external differences of the company,and scientifically formulate the salary gaps,and build the salary gap systems suitable for the companies; it should improve the company incentive mechanism,clear reward and punishment standards,and formulate a reasonable promotion mechanism for the company's management; it should clarify the company's management responsibilities and rights,and establish an effective supervision system; it should improve the companies' internal governance mechanisms,and reasonably check and control the company's shareholder control; it should increase the companies' executive salary transparency and improvement of the companies' executive salary information disclosure system; companies should also focus on establishing the concept of integrity- based and standardized management of companies' operations,and actively play their own advantages,and continuously improve the companies' core competitiveness,and gradually expand market share,and enhance the absorption force of commercial credit financing.

Key words:Salary gap,Debt financing,Commercial credit financing,Equity financing