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Article
Publication date: 18 November 2021

Xiaoguo Xiong, Weihong Chen and Xi Zhong

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…

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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.

Details

Chinese Management Studies, vol. 16 no. 5
Type: Research Article
ISSN: 1750-614X

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