Energy related public environmental concerns and intra-firm pay gap in polluting enterprises: Evidence from China

Kung-Cheng Ho, Cheng Yan, Giray Gözgör and Yan Gu

Energy Economics, 2024, vol. 130, issue C

Abstract: This study empirically investigates the impact of energy related public environmental concerns on the pay gap within polluting companies. It uses the extreme environmental event of the PM2.5 surge at the end of 2011, which led to an upsurge in energy related public environmental concerns in China, as a quasi-natural experiment. According to our findings, energy related public environmental concerns lead to a significant increase in the executive–employee pay gap of polluting companies compared to that of non-polluting companies, owing to a significant increase in executive compensation and no significant change in employee income. The effect of energy related public environmental concerns on increasing the pay gap within polluting companies is more significant in samples with high agency costs, poor information transparency, less analyst follow-up, and fewer institutional investors' shareholding. Furthermore, as energy related public environmental concerns exacerbate the polluting firms' internal pay gap, their total factor productivity and investment efficiency fall significantly. In summary, energy related public environmental concerns not only widen the wage gap within polluting enterprises but also worsen their operational and investment efficiency, which has important policy implications for emerging market economies seeking to balance environmental protection and economic development.

Keywords: Public environmental concerns; Intra-firm pay gap; Polluting enterprises; PM2.5 surge; Emerging economies (search for similar items in EconPapers)
JEL-codes: G11 G32 N72 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:130:y:2024:i:c:s0140988324000288

DOI: 10.1016/j.eneco.2024.107320

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