The Impact of the CEO–Employee Pay Gap on Corporate Social Responsibility

Yiqing Tan

Australian Accounting Review, 2025, vol. 35, issue 3, 241-256

Abstract: This study analyzes how compensation gaps influence corporate social responsibility (CSR) by focusing on the chief executive officer (CEO)–employee pay ratio. The empirical results reveal that companies with larger CEO–employee pay ratios exhibit worse CSR performance. In addition, this study demonstrates that the negative relationship between the CEO–worker compensation gap and CSR performance is moderated by board structure, institutional shareholdings, and managerial ability. The robustness of the main findings is guaranteed by addressing the endogeneity problem and using alternative measures. Collectively, these findings highlight the impact of the CEO–worker compensation gap on CSR and provide empirical evidence from the perspective of social welfare that can be used by researchers, regulators, and practitioners to evaluate pay gap regulations.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ausact:v:35:y:2025:i:3:p:241-256

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