Abstract Based on the hypothesis that the member of the corporate executive team has fairness preference, this article builds a theoretical model of the incentives of the executive team championship on firm performance under equity preference. Through the model derivation and analysis, we find the following relationship between the equity preference strength, the pay gap and the performance: the greater the intensity of executives equity preference, the worse the business performance, that is, the executive equity preference reduces his equilibrium level effort, at the same time leads to the enterprise to improve their low pay of championship contest losers, so business performance will decrease with the increase of the strength of executive equity preference; the relationship between the pay gap and business performance is an inverted "U" shape, which means when the executive pay gap is small, expanding the pay gap will increase corporate earnings, when executive pay gap exceeds a certain valu
|
Received: 10 August 2012
|
|
Corresponding Authors:
HANG Bang gen
|
|
|
|