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Orthogonal frequency division multiplexing (OFDM) is suitable for high rate data transmission because it can combat delay dispersion and multipath fading. Aiming at its very high peak-to-average power ratio (PAPR), theory analysis and simulation of companding technique are processed. Simulation results indicate that companding technique can reduce the PAPR of OFDM system greatly, but bit error rate of OFDM system is high. An improved scheme is proposed to improve bit error rate performance. Simulation results indicate that scheme proposed can improve error probability effectively.