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Executive Pay Gap in Family Controlled Businesses
Ying - Fen Lin,
National Dong Hwa University
Yu - Ting Shih, National Dong Hwa University
ABSTRACT. This study explores the relationship between executive pay gap in family controlled businesses and hierarchy level, relationship between number of contestants and pay gap, and impact of pay gap on company’s relative industry performance based on tournament theory. The study period is during 2002 and 2004. T-test and regression analysis have been used to examine the hypotheses proposed by this study. The result showed that the tournament theory did not apply to all industries. The phenomenon of increasing pay gap as hierarchy level increases was found in family controlled businesses. However, the relationship between number of contestants and executive pay gap or relationship between executive pay gap and relative industry performance was not identified in family controlled high-tech businesses due to the uniqueness of high-tech industry such as organizations require high level of collaboration and so on.
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