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Too much of a good thing: the non-linear effect of vertical pay dispersion on vice presidents’ voluntary turnover rate

Xiaoguo Xiong (School of Business Administration, South China University of Technology, Guangzhou, China and School of Business Administration, Guangxi University, Nanning, China)
Weihong Chen (School of Economics, Guangxi University, Nanning, China)
Xi Zhong (School of Management, Guangdong University of Technology, Guangzhou, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 18 November 2021

Issue publication date: 25 November 2022

211

Abstract

Purpose

While the effect of vertical pay dispersion on the voluntary turnover rate of vice presidents (VPs) has received attention, the existing research conclusions are still divided. Therefore, this study aims to explore the relationship between vertical pay dispersion and voluntary turnover rate of VPs in a Chinese context using data from listed firms.

Design/methodology/approach

Integrating tournament theory and social comparison theory, this study examines the non-linear effect of vertical pay dispersion on VPs’ voluntary turnover rates using empirical data from Chinese A-share listed firms from 2007 to 2016.

Findings

The results reveal a U-shaped relationship between vertical pay dispersion and the voluntary turnover rate of VPs. After further incorporating the moderating effect of the board governance structure, the effect is found to be enhanced in firms with more efficient board governance (i.e. smaller board size, higher board turnover and higher proportion of outside directors). Further analysis indicates that the aforementioned conclusions mainly exist in non-state-owned enterprises rather than state-owned enterprises.

Originality/value

The findings deepen the understanding of the costs and benefits associated with vertical pay dispersion, enrich the research findings on pay dispersion and contribute to the integration of previously inconsistent findings.

Keywords

Citation

Xiong, X., Chen, W. and Zhong, X. (2022), "Too much of a good thing: the non-linear effect of vertical pay dispersion on vice presidents’ voluntary turnover rate", Chinese Management Studies, Vol. 16 No. 5, pp. 1271-1293. https://doi.org/10.1108/CMS-09-2020-0399

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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