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Employee compensation and firm performance: An empirical study from the perspective of human capital in listed companies

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  • Yang, Boyang
  • Wang, Yinuo

Abstract

Using panel data of China’s A-share listed companies from 2013 to 2024, this study examines the impact of employee compensation on firm performance from a human capital perspective. The results show that higher compensation significantly enhances total factor productivity. The effect operates partly through improved operational efficiency and R&D investment, with stronger impacts observed in non-state-owned firms and eastern regions. Further analysis reveals that compensation structure matters: while both executive and employee pay enhance TFP, employee compensation has a stronger effect, and excessive income concentration undermines productivity, highlighting the joint role of incentive intensity and internal fairness.

Suggested Citation

  • Yang, Boyang & Wang, Yinuo, 2026. "Employee compensation and firm performance: An empirical study from the perspective of human capital in listed companies," Finance Research Letters, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:finlet:v:98:y:2026:i:c:s1544612326003715
    DOI: 10.1016/j.frl.2026.109841
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