Can TMT vertical pay disparity promote firm innovation performance? The moderating role of CEO power and board characteristics
European Journal of Innovation Management
ISSN: 1460-1060
Article publication date: 8 April 2021
Issue publication date: 23 June 2022
Abstract
Purpose
Based on the tournament theory and the principal agent theory, this study aims to empirically investigate how top management team (TMT) vertical pay disparity (the pay disparity between the CEO and non-CEO executives) influences firm innovation performance.
Design/methodology/approach
This study empirically tested the hypotheses based on a sample of listed high-tech companies in China during the period between 2007 and 2018.
Findings
TMT vertical pay disparity promotes innovation performance; CEO power undermines the positive effect of TMT vertical pay disparity on innovation performance; the negative moderating effect of CEO power is mitigated by board age and gender and educational levels, whereas the proportion of female directors has no such effect at any significant level.
Originality/value
This study uniquely contributes to the theoretical and empirical development of tournament theory and the principal agent theory.
Keywords
Acknowledgements
Funding: This research was supported by the National Social Science Foundation Project of China (Grant No. 2020BGL103).
Citation
Zhong, X., Wan, H. and Ren, G. (2022), "Can TMT vertical pay disparity promote firm innovation performance? The moderating role of CEO power and board characteristics", European Journal of Innovation Management, Vol. 25 No. 4, pp. 1161-1182. https://doi.org/10.1108/EJIM-10-2020-0434
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited