 CEO pay structure and ESG rating disagreementXiangqiang Liu, Yuling Peng, Qinyang Li and Chu-Hua Wu International Review of Financial Analysis, 2025, vol. 102, issue C Abstract: As the concept of sustainable development continues to gain prominence, environmental, social, and governance (ESG) ratings have become critical factors in investment decision-making. However, discrepancies among ESG rating agencies have led to inefficiencies in capital market pricing. This study investigates the relationship between CEO compensation structure and ESG rating disagreement, utilizing ESG ratings from six agencies for A-share listed companies. The findings indicate that a higher proportion of equity-based compensation in a CEO's pay structure is associated with lower ESG rating disagreement. Mechanism tests suggest that equity pay can reduce ESG rating discrepancies by improving the quality of ESG disclosures and ESG practices. Cross section analysis demonstrate that this relationship is more pronounced in firms with greater CEO power, weaker information environments, fewer green investors, as well as in Non-SOE enterprises and in Non-heavily polluting industries. Keywords: ESG rating disagreement; CEO pay structure; ESG information disclosure; ESG practices; Equity-based compensation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:102:y:2025:i:c:s1057521925001887 DOI: 10.1016/j.irfa.2025.104101 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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