Literature Review of Executive Compensation

The research on executive compensation has always been a hot topic in the East and West. Based on the literature published in Chinese and English academic journals from 2015 to 2017, this paper analyzes the research status of executive compensation in the East and the West. This paper summarizes the factors that affect executive compensation, the impact of executive compensation on the development of enterprises, the compensation gap on the development of enterprises and related research methods in order to provide a reference for the study of executive compensation.


Introduction
In modern corporate governance, executive compensation is a commonly used incentive method. The executive market releases information related to executive compensation plan formulated by the board of directors or compensation committee for executives. Qualified professional managers can sniff this information, join in the development and operation of enterprises, create value for shareholders, and make a long-term development for enterprises. There are two different views on the effect of executive compensation on enterprise development. The first view is that there is a reverse relationship between executive compensation and the development of the enterprise. The higher the executive compensation, the more likely the executive will violate the moral constraints and deviate from the value orientation of the enterprise itself, which is extremely unfavorable for the sustainable development of the enterprise. In Lucian boccek and Jesse Friede's book "getting paid for nothing-examining the executive compensation system in the United States", they put forward solutions to alleviate this harmful impact. They think that through the reform of management system, directors can bear more responsibilities for shareholders, so that when making compensation arrangements, they can avoid the distortion of compensation plans to a certain extent Condition. The second view is that there is a positive correlation between executive compensation and enterprise development. Under the incentive of executive compensation, the management will be loyal to the interests and values of shareholders. In the book executive compensation, Ella T. Kay and Steven van Putten analyzed the listed companies in the United States, and thought that executive compensation matched with their contribution to the company, and the incentive for executives was conducive to the effective development of the whole market.
Compared with mature markets such as the United States, the executive compensation of Chinese listed companies is not only the same but also different. There are both the phenomenon of rapid growth of executive pay and the emergence of sky high pay. And "zero compensation" is a unique phenomenon of Chinese listed companies. The issue of executive compensation is not only related to the governance and development of the enterprise itself, but also related to social equity, corruption and other social hot spots of national economy and people's livelihood. Every year, the relevant media will analyze, compare and rank the executive compensation of listed companies, and deeply analyze its development trend, change causes, etc. This has further stimulated the public's enthusiasm and interest in the issue of executive compensation. In recent years, the issue of executive compensation has become the focus of academic and practical circles. Therefore, this paper summarizes the literature related to executive compensation in Chinese and English, discusses the development trend of executive compensation, and puts forward constructive suggestions on the future research of executive compensation.

Sample Source
This paper selects five international authoritative journals and five top Chinese  Table 1 and Table 2   It can be seen from Table 1 that the articles on executive compensation have appeared in all five English journals in the past three years, and the number of relevant literature is relatively large. The number of documents in three years showed a U-shaped trend. It is very common for English journals to study the issue of executive compensation, which is a research hotspot.
It can be seen from Table 2 that in China, articles on executive compensation have also appeared in these five journals in the past three years, but the number of relevant literature is less than that in English. This shows that the gap between China and the west is obvious. It can be seen that the number of literature between 15 and 16 years is the largest, which may be due to the promulgation of the "salary limit order", which makes the executive compensation change greatly compared with the past, so it has attracted the attention of scholars.

Sample Research Content
Through the study of Chinese and English executive compensation literature, as shown in Table 3. This paper will mainly discuss from the following four aspects: first, the factors that affect executive compensation; second, the impact of executive compensation on the development of enterprises; third, the impact of pay gap on the development of enterprises; finally, the methods of studying executive compensation in Chinese and English are classified.

Factors Affecting Executive Compensation
There are many factors that affect executive compensation. Western scholars Journal of Service Science and Management First of all, the cross-sectional change of job hopping effect is mainly driven by market forces. In particular, when current executives have greater job mobility in the labor market, when companies lose senior managers, and when other X. D. Li companies get favorable job opportunities, pay increases are more obvious. Secondly, the executive compensation of job hopping enterprises is not as competitive as that provided by competitors in the early stage of the jump, but this compensation defect is greatly reduced in the late stage of the jump. This shows that job hopping has "rebalanced" low wage companies' pay packages. Finally, the pay increase after the job hopping incident effectively helped to retain other executives. Cadman, Carterand Hillegeist filed a lawsuit against Citigroup, and the court ruled that the enterprise waste related to CEO's salary was claimed by the court. The court intervention was analyzed as an alternative governance mechanism in the case of excess salary. In a cross-sectional analysis, they found that while CEOs with higher excess pay responded more negatively to these companies, it was more positive for those with higher excess pay and poor per- control. In addition, they found that after the acquisition of non family businesses, the possibility of CEO turnover decreased, indicating that these M &amp; A CEOs will not face higher possibility of dismissal when they receive higher level of remuneration. In contrast, the acquisition has no significant impact on the turnover of the CEO of the family business [8] [9] [10].

The Impact of Executive Compensation on Enterprise Development
Executive's behavior decision-making plays an important role in the operation of the enterprise. As an incentive way for executives, executive compensation to (long-term) performance. In other words, their pay performance sensitivity is low. The response of market value to the possibility or scope/content of executive compensation regulation is negatively correlated with compensation performance sensitivity. EI yet Chu, saw IMM song study explains whether over investment is related to the relationship between executive compensation and earnings management. There is evidence that the application of investment strategies by executives has resulted in a 23% increase in remuneration and a 1% increase in share price. However, the value of this finding to shareholders is unclear, because shareholders can also share the benefits of increasing equity value, which is related to the higher risk of over investment. It is also worth noting that the ability of executive directors is well reflected in the incentive ratio, but not for companies with large shareholders. Nevertheless, the executive directors' short-term compensation and bonuses reflect their ability to outperform others in their respective industries. In addition to companies controlled by major shareholders, over investment has actually increased the equity of executives in our research. In the short term, it does benefit shareholders because they share the gains as share prices improve. However, in the long run, the correlation between over investment and high risk is not clear. Although the short-term compensation reflects the executive director's ability, the increase of over investment will increase the equity value of directors, so more research on long-term equity compensation is needed [11] [12].

Research Methods of Executive Compensation
Among the 18 English literatures about executive compensation, empirical research methods play a leading role. In these documents, the empirical models are generally multiple linear log regression model, multiple log linear regression model, multiple linear regression model. However, these models are not used alone, but more are combined with the establishment of mathematical models to derive the two-way service for research, and most of them use the robustness test to make the research conclusions more reliable. In addition, some literatures also use experimental research methods, which greatly enriches the research methods in this field.

Factors Affecting Executive Compensation
There are many factors that affect executive compensation. Chinese scholars analyze and study the internal and external factors from different perspectives. Xiaomei Han, Qihui Gong and Liansheng Wu studied the impact of the reduction of salary tax cost brought by the reform of salary tax credit on the salary arrangement of enterprises against the background of China's 2008 salary tax credit reform. The research shows that in the case of implementing the tax deduction standard, the total tax cost of increasing the salary paid to ordinary em-ployees is higher than the tax cost of increasing the salary paid to senior managers, which leads to the enterprise more likely to increase the income of senior managers than to increase the income of ordinary employees, which leads to the expansion of the income gap between senior managers and ordinary employees. It can be seen that the main bearers of the tax wage system to the workers' income depression are ordinary employees rather than senior managers. After the reform of salary tax credit, based on the expectation of compensation, ordinary employees will take it for granted that they should enjoy the increase of the share of workers' income brought by the tax reform. Therefore, after the reform of compensation tax deduction, enterprises are more inclined to increase the salary of ordinary employees, so as to narrow the pay gap between executives and ordinary employees. The research of Cai Chai, Shizhong Huang and Qinhua Ye shows that compared with the companies implementing the cost leading strategy, the companies implementing the differentiation strategy should adopt the more radical executive compensation incentive mechanism, and the average level of monetary compensation incentive for the executives will be significantly higher; compared with the companies implementing the cost leading strategy, the companies implementing the differentiation strategy should adopt the more radical high In the management of salary incentive mechanism, the average gap of monetary salary between executives will be significantly larger. Xingfei Jia and Xianzhi Zhang believe that the change of accounting concept will bring about the change of executive compensation contract. The sensitivity of net profit and executive compensation decreased significantly, while the sensitivity of net asset and executive compensation increased significantly, reflecting that managers pay more attention to capital appreciation in business philosophy and decision-making behavior; compared with companies with lower accounting sensitivity, companies with higher accounting sensitivity pay more attention to capital appreciation after the accounting concept changes, their management The degree of change of business philosophy and decision-making behavior is greater, that is, the decrease of net profit and executive compensation sensitivity is greater, while the increase of net assets and executive compensation sensitivity is greater; compared with non-state-owned holding companies, state-owned holding companies have a greater degree of change of management philosophy and decision-making behavior after the change of accounting concept, that is, under the sensitivity of net profit and executive compensation The decrease degree is greater, while the increase degree of net assets and high management compensation sensitivity is greater [13] [14] [15]. show that the age of executives has a significant impact on the level of compensation. The older the relative age and the absolute age are, the higher the level of compensation is. However, the age that has a significant relationship with compensation has no significant correlation with corporate performance, and the age of executives reduces the sensitivity of compensation performance, especially when performance declines Sensitivity, reflecting that the age of executives reduces the effectiveness of compensation contracts. Further research shows that there is an intermediary role of social capital in the influence of senior executives' age on compensation contracts, and the older the senior executives are, the more likely they are to have political capital, which enhances their negotiation and control in the signing of compensation contracts [19] [20].

The Impact of Executive Compensation on Enterprise Development
Executive compensation has a far-reaching impact on enterprises, whether it is the disclosure of information, the adjustment of capital structure, the company's performance and so on. Xinsheng Cheng, Jianmei Liu and Jinghan Chen studied whether executives disclose more strategic information when they receive excess compensation, and further tested whether the motivation of strategic informa- and CEOs from the perspective of compensation. It is found that "director supervision compensation" is positively related to CEO compensation, and has a significant positive impact on the future performance of the company, and "director excess compensation" is also positively related to CEO compensation, but has a significant negative impact on the future performance of the company. The intermediary effect test shows that the impact of "director supervision compensation" and "director excess compensation" on the future performance of the company is 15.37% and 40.54%, respectively It is indirectly realized through CEO compensation arrangement, which shows that there are two effects of supervision and collusion between directors and CEO at present, but collusion effect is stronger than supervision effect. Liangmou Gao and Jianci Lu used the threshold panel model to investigate the asymmetric incentive effect of internal pay gap on corporate performance, and then explained the internal mechanism of the asymmetric effect by examining the incentive consequences of different levels of pay gap on executives and ordinary employees. It is found that there is an inverted U-shaped relationship between internal compensation gap and corporate performance, and the positive incentive effect is different with the change of gap, that is, it has significant threshold characteristics [14] [24] [25].

The Impact of Pay Gap on Enterprise Development
The gap between executives and employees is related to enterprise innovation, employees' sense of fairness and legal compliance. Dongmin Kong, Mingli Xu and Gaowen Kong used the data of Listed Companies in China to investigate the impact of the pay gap between managers and employees on enterprise innovation. They found that: first, on the whole, the results support the tournament theory, that is, the pay gap has a positive impact on innovation output. Second, in the case of low level of pay gap, expanding the pay gap significantly improves the innovation of enterprises, indicating that the tournament theory plays a leading role in innovation activities; but in the case of high level of pay gap, expanding the pay gap has a negative effect on enterprise innovation, indicating that the ratio theory begins to play a role. Third, the positive incentive effect of compensation gap on innovation is mainly driven by the compensation premium of management, which reduces the innovation output to a certain extent.
Their research provides an important perspective for the regulatory and enterprise sectors, and has important reference significance for the government to issue policies to encourage enterprise innovation. Yu Lei and Jianhua Guo demonstrated that it is an unfair distribution rule that executives' pay stickiness is greater than employees' pay stickiness from the aspects of content and motivation of rules, four factor theory of organizational justice and traditional Chinese concepts. On this basis, the study found that unfair rules will reduce the efficiency of employees, and reduce the incentive effect of pay gap on employees.