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

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.