Constant | −3.326 | 0.000 | −5.393 | 0.000 | ||
Megap | 0.088 | 0.037 | 1.366 | 0.181 | 0.000 | 1.200 |
Growth | 0.173 | 0.002 | 1.161 | 0.065 | 0.152 | 1.045 |
Tech | −0.001 | 0.679 | 1.279 | −0.002 | 0.354 | 1.151 |
Lever | −0.425 | 0.007 | 1.531 | −0.937 | 0.000 | 1.520 |
Size | 0.123 | 0.000 | 2.055 | 0.161 | 0.000 | 1.784 |
SOE | −0.026 | 0.703 | 1.249 | 0.110 | 0.017 | 1.162 |
Ind | −0.136 | 0.038 | 1.197 | 0.082 | 0.129 | 1.105 |
R2 | 0.188 | 0.130 | ||||
9.236 | 19.088 | |||||
Change in | 0.188 | 0.130 |
CEO term and number of years of service, board independence, whether the CEO serves as chairman, whether the CEO retires within 2 years, and whether the CEOs are the major shareholders or not | |
Whether the CEO is the founder, chairman, and sole internal director with a large representation of the right or not | |
Term of office, shareholding ratio, and two posts concurrently | |
Second grade, share diversification, and senior executive tenure | |
Years of service as CEO, double duty, equity concentration, and whether the CEO is the founder or not | |
CEO’s preference of rights to bargain for | |
Degree of decentralization and concurrent and independent directors ratio | |
Integration of two posts, internal director ratio, board size, and shareholding ratio of the first major shareholders | |
Yu [2015] | Unification of two posts, diversification of shareholding, and proportion of management |
The proportion of control rights, the degree of separation of two rights, and the unification of two posts | |
Unification of two posts, diversification of shareholding, size of board directors, and proportion of independent directors | |
The number of board, executive title, senior management qualifications, senior management executive ownership, senior management tenure, and stock rights dispersed |
EPS | 1 | ||||||||||
Megap | 0.248 | 1 | |||||||||
Share | −0.026 | −0.064 | 1 | ||||||||
Duality | 0.000 | 0.001 | 0.258 | 1 | |||||||
Overcon | 0.020 | 0.035 | 0.203 | 0.060 | 1 | ||||||
Growth | 0.090 | 0.073 | 0.175 | 0.079 | 0.156 | 1 | |||||
Tech | −0.014 | 0.057 | 0.232 | 0.092 | 0.106 | 0.156 | 1 | ||||
Lever | −0.084 | 0.026 | −0.304 | −0.113 | −0.092 | −0.042 | −0.246 | 1 | |||
Size | 0.208 | 0.347 | −0.263 | −0.141 | −0.003 | 0.044 | −0.229 | 0.540 | 1 | ||
SOE | 0.043 | −0.037 | −0.512 | −0.284 | −0.204 | −0.186 | −0.178 | 0.311 | 0.290 | 1 | |
Ind | −0.027 | −0.123 | 0.024 | 0.024 | −0.066 | −0.027 | −0.150 | −0.147 | −0.232 | −0.071 | 1 |
−2.726 | 0.149 | −0.035 | −0.441 | −0.164 | 10.750 | −0.34208 | −1.90642 |
0.16378 | 16.09 | 0.839274 | −1.49645 |
Explained variables | Future performance of the firm | EPS | Final net profit/total number of closing units | |
Interpreting variables | Pay gap between employees and executives | Megap | LN (average remuneration for directors, supervisors, and top three employees-average pay for general employees) | |
Adjusting variables | Management power characteristics | Executive shareholding ratios | Share | Total executive stock holdings/total number of shares |
Two posts concurrently | Duality | If the chairman and general managers concurrently hold two posts, the value is 1; otherwise, it is 0 | ||
Management power features | Management holdings | Overcon | If the management holdings increased during the 2-year research period, the value will be 1; otherwise, it is 0 | |
Management overconfidence features | Changes | |||
Control variables | Growth of enterprise | Growth | (Final total assets-opening total assets)/opening total assets | |
Technical complexity | Tech | Total number of developments/total employees | ||
Capital structure | Lever | Total liabilities/total assets | ||
Enterprise scale | Size | LN (year-end total assets) | ||
Company nature | SOE | The value of state-owned firm is 1; otherwise it is 0 | ||
Industry | Ind | The value of manufacturing industry is 1; otherwise, it is 0 |
Management relative compensation | Top three executive compensation/all executive compensation | The higher the management’s relative pay, the stronger its ability to control the firm with confidence [ |
The historical performance of the enterprise | High performance in company’s annual reports | Managers tend to attribute high historical performance to their outstanding talent and decision-making power [ |
Mainstream media evaluation | The vocabulary used to collect reports, as shown in self-confidence, optimism and so on with overconfidence, appears robust and reliable | The more number of words describing optimism, the more overconfident they are [ |
Deviation of enterprise profit forecast | Compare the forecast profit of the enterprise with actual one | The more assertive an executive, the easier it is to estimate its profitability optimistically [ |
Management stock change | Management to increase shareholding | If management is optimistic about the future development of enterprises, it increases their holdings [ |
How often the management implements mergers and acquisitions | Number of merger acquisition decisions made by executives over a period of time | The more assertive executives are inclined to overestimate mergers and acquisitions, the more they are engaged frequently with mergers and acquisitions [ |
Industry sentiment index | Index interval is 0–1, if >100 is considered as overconfident | The larger the index, the more overconfident the executives are [ |
Consumer confidence index | Consumers’ estimation of current market situation and subjective perception of consumption psychology | The larger the product value, the more overconfidence the executives represent [ |
Growth | 0.097 | 0.094 | 0.096 | 1.074 |
Tech | 0.000 | −0.001 | −0.001 | 1.192 |
Lever | −0.922 | −0.821 | −0.802 | 1.571 |
Size | 0.197 | 0.151 | 0.148 | 1.853 |
SOE | 0.055 | 0.078 | 0.079 | 1.476 |
Ind | 0.026 | 0.033 | 0.032 | 1.114 |
Megap | 0.158 | 0.149 | 1.252 | |
Share | 0.003 | −0.035 | 1.478 | |
Megap*Share | −0.441 | 1.058 | ||
0.104 | 0.125 | 0.129 | Durbin-Watson1.410 | |
22.788 | 21.159 | 19.470 | ||
Change in | 0.104 | 0.022 | 0.004 |
Logarithm of the average remuneration of the top three directors | |
Logarithm of the average remuneration of the top three highest paid executives | |
Ratio of total annual salary of directors, supervisors, and senior executives to the total number of salaried executives | |
Total annual salary of directors, supervisors, and senior executives | |
The ratio of directors, supervisors, and executives’ salaries to the total number of executives | |
Ratio of total annual salary of directors, supervisors, and senior executives to the total number of executives | |
Logarithm of the average remuneration of the top three directors, supervisors, and senior executives |
Cash paid to employees-total management salary/cash received from sales of goods or service | |
Cash paid to employees/average number of employees per year | |
(Cash paid to workers+employee compensation at the end of the quarter)-(employee compensation at the beginning of the quarter-executive annual pay)/(total employees-executive number) | |
(Cash paid to employees and supervisors-the total annual remuneration of supervisors)/(total number of employees-total number of executives) |
Company future performance (first year, second year, and third years’ average performance) | |
The total asset yield of the company in the second year and the average total asset yield for the following 3 years |
B | 0.06 | −2.17 | 0.74 | 13.12 | 11.99 | 14.23 |
C | 0.31 | −3.12 | 14.27 | 13.22 | 11.12 | 16.09 |
D | 0.41 | 0.02 | 0.95 | 13.14 | 12.45 | 13.94 |
E | 0.39 | 0.05 | 1.37 | 13.33 | 10.75 | 14.42 |
F | 0.40 | −0.32 | 3.16 | 13.59 | 12.45 | 14.84 |
G | 0.36 | 0.19 | 0.82 | 13.24 | 12.52 | 14.43 |
H | 0.49 | 0.49 | 0.49 | 13.43 | 13.43 | 13.43 |
I | 0.35 | −0.48 | 2.25 | 13.46 | 12.25 | 15.09 |
K | 0.63 | 0.19 | 1.44 | 14.33 | 13.34 | 15.57 |
L | 0.41 | 0.04 | 1.63 | 13.38 | 12.60 | 14.47 |
M | 0.20 | −0.51 | 0.72 | 13.45 | 12.56 | 14.58 |
N | 0.44 | 0.12 | 1.27 | 13.03 | 12.54 | 13.43 |
P | 0.70 | 0.70 | 0.70 | 13.25 | 13.25 | 13.25 |
Q | 0.36 | 0.16 | 0.56 | 13.24 | 13.19 | 13.28 |
R | 0.51 | 0.05 | 1.06 | 13.59 | 12.78 | 15.17 |
H1 | Executive–employee pay gap is positively correlated (0.248) with the firm’s future performance, i.e., the greater pay gap in t the year (the first | Verified |
H2 | The greater the management power, the weaker (−0.441) the positive relationship between employee pay gap and future performance | Verified |
H2A | The higher the percentage of executive ownership, the weaker (−0.035) the positive relationship between pay gap and firm future performance | Verified |
H2B | Chairman and general manager holding two posts concurrently weaken (−0.164) the positive relationship between pay gap and firm future performance | Verified |
H3 | The higher the level of management overconfidence, the weaker (−3.425) the positive relationship between pay gap and firm future performance | Verified |
Constant | −3.425 | 0.000 | −5.097 | 0.000 | ||
Megap | 0.125 | 0.004 | 1.214 | 0.164 | 0.000 | 1.242 |
Growth | 0.052 | 0.0281 | 1.046 | 0.108 | 0.023 | 1.059 |
Tech | −0.001 | 0.561 | 1.285 | −0.001 | 0.729 | 1.154 |
Lever | −0.386 | 0.041 | 1.767 | −0.908 | 0.000 | 1.521 |
Size | 0.101 | 0.015 | 1.948 | 0.158 | 0.000 | 1.879 |
SOE | 0.022 | 0.739 | 1.136 | 0.093 | 0.040 | 1.204 |
Ind | 1.886 | 1.000 | 1.209 | 0.052 | 0.333 | 1.105 |
0.098 | 0.132 | |||||
3.646 | 20.319 | |||||
Change in | 0.098 | 0.132 |
B | Mining | 30 | 2.5 |
C | Manufacturing | 933 | 78.5 |
D | Electricity, heating, gas, and water production and supply | 18 | 1.5 |
E | Construction | 29 | 2.4 |
F | Wholesale and retail trade | 34 | 2.9 |
G | Transportation, warehousing, and postal services | 13 | 1.1 |
H | Accommodation and catering | 1 | 0.1 |
I | Information transmission, software, and information technology | 80 | 6.7 |
K | Real estate | 12 | 1 |
L | Leasing and business services | 9 | 0.8 |
M | Scientific research and technology | 9 | 0.8 |
N | Water conservatory, environment, and public facilities management | 6 | 0.5 |
P | Education | 1 | 0.1 |
Q | Health and social work | 2 | 0.2 |
R | Culture, sports, and entertainment | 12 | 1 |
EPS | 0.32 | 0.21 | 0.63 | −3.12 | 14.27 |
Megap | 13.26 | 13.22 | 0.65 | 10.75 | 16.09 |
Share | 0.11 | 0.01 | 0.16 | 0.00 | 0.70 |
Duality | 0.24 | 0.00 | 0.43 | 0.00 | 1.00 |
Overcon | 0.20 | 0.00 | 0.40 | 0.00 | 1.00 |
Growth | 0.22 | 0.12 | 0.47 | −0.38 | 8.55 |
Tech | 14.23 | 11.29 | 12.97 | 0.00 | 85.53 |
Lever | 0.43 | 0.41 | 0.19 | 0.04 | 1.04 |
Size | 22.39 | 22.24 | 1.12 | 19.21 | 27.83 |
SOE | 0.41 | 0.00 | 0.49 | 0.00 | 1.00 |
Ind | 0.78 | 1.00 | 0.41 | 0.00 | 1.00 |