Abstract
The fairness of compensation has been a prominent focus for non-family managers, and pay dispersion, which reflects compensation fairness, has attracted much attention from scholars. Based on social comparison theory, this study investigates the factors that affect the pay dispersion between CEO and non-family managers. In family firms, the role of CEO, which is central in corporate governance, can be filled by either a family or a non-family member. This study provides insights into how the identity of the CEO affects pay dispersion and investigates the moderating effects of CEO tenure and institutional environment. Using the data of Chinese listed family firms from 2009 to 2015, the results show that the presence of non-family CEOs could decrease the pay dispersion between CEO and non-family managers. Empirical evidence also supports that the negative relationship between CEO identity and pay dispersion weakens when CEO tenure increases and the institutional environment matures.
Highlights
The continuous pursuit of sustainable development makes family firms compete fiercely for talent, and recruiting non-family managers often becomes a necessity
Our research focus is to understand the relationship between CEO identity and non-family managers’ pay dispersion, and the moderating effect of CEO tenure and institutional environment
The results showed that the coefficient of this interaction term was positively significant (β = 0.030, p < 0.05), which suggested that CEO tenure can moderate the relationship between CEO identity and pay dispersion, and the hypothesized negative effect weakens as CEO tenure increases
Summary
The continuous pursuit of sustainable development makes family firms compete fiercely for talent, and recruiting non-family managers often becomes a necessity. Managers can highlight family characteristics and consolidate family control (Bach and Serrano-Velarde, 2015), generate greater job security (Cai et al, 2010; Luo and Chung, 2013), and exhibit more emotional attachment to the firm. Nonfamily managers are generally selected from the competitive human resource market, and most have received formal education and training (Chrisman et al, 2014). These individuals are more available for the managerial positions than the limited number of family members (Fang et al, 2021). To attract and motivate non-family managers to act in the best interests of the holding
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