Abstract: Based on social comparison theory and equity theory, this paper analyzes the effect of external fairness of executive compensation on the level of enterprise risk taking, finding that the higher external fairness of executive compensation, the higher level of enterprises′ risk taking; considering property right nature, the impact of external fairness of executive compensation in state-owned enterprises on the risk taking is not significant, while the impact of external fairness of executive compensation in non-state enterprises on the risk taking is significant; external fairness of executive compensation can significantly improve the enterprises′ performance and the risk taking plays a partial mediating role between the external fairness of executive compensation and enterprises′ performance, which is a new finding. This study enriches the theory of executive compensation fairness and provides a new perspective for the study of risk taking behavior theory; the conclusions support that it is appropriate to adopt different compensation incentive methods and performance appraisal systems for state-owned and non-state-owned enterprises′ executives.

Key words: fairness, risk taking, executive compensation