ESG disclosure and internal pay gap: Empirical evidence from China

Muhammad usman Khurram, Lifeng Chen, Mohammad Zoynul Abedin, Douglas A. Adu and Brian Lucey

International Review of Economics & Finance, 2024, vol. 92, issue C, 228-244

Abstract: This study aims to examine how ESG disclosure can modify the internal pay gap between executives and employees, especially green, high-tech, and SOE enterprises in China. We employed Bloomberg's ESG disclosure score from 2015 to 2019 to identify the U-shape relationship between ESG disclosure and the internal Pay gap (IPG), adopting the differentiation grouping method of green enterprises, high-tech enterprises, and State-owned enterprises (SOEs) to explore the impact of enterprise heterogeneity, providing more policy enlightenment on ESG performance. Our findings indicate a significant U-shaped relationship between ESG disclosure and the internal pay gap, and endogenous characteristics of green and high-tech enterprises have a positive moderating effect within this U-shaped relationship. These findings are statistically significant and consistent with transmissions with endogenous characteristics of the enterprises. Notably, the connectedness shows dynamic patterns by 2SLS and GMM regression, highlighting the risk of ESG disclosure being the shock transmitters to enterprise internal control. Our study is prone to benefit lawmakers, regulators, and firm executives responsible for analyzing and assessing the pay gap.

Keywords: ESG disclosure; Internal pay gap; State-owned enterprises; Green enterprises; High-tech enterprises; China (search for similar items in EconPapers)
JEL-codes: G18 G30 O30 O32 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:92:y:2024:i:c:p:228-244

DOI: 10.1016/j.iref.2024.02.023

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