Does Pay Disparity within Top Management Teams Lead to Bribery Activity? The Moderation of Demographic Diversity

Hailiang Zou (), Yunfeng Lu and Guoyou Qi ()
Additional contact information
Hailiang Zou: SILC Business School, Shanghai University, Shanghai 200444, China
Yunfeng Lu: SILC Business School, Shanghai University, Shanghai 200444, China
Guoyou Qi: School of Business, East China University of Science and Technology, Shanghai 200237, China

Sustainability, 2023, vol. 15, issue 4, 1-23

Abstract: Prior studies have suggested that a large pay gap within the top management team (TMT) can motivate executives to outperform each other and that such competition consequently enhances productivity. We argue that a high pay disparity elicits managerial negative efforts and promotes bribery activities, but this effect can be mitigated by demographic diversity in the TMT and also can be affected by the characteristics of the CEO–TMT demographic interface. Using a sample of listed Chinese firms, our empirical results show that pay disparity is positively associated with bribery expenditure and this association derives mainly from the vertical component when pay disparity is examined via its vertical and horizontal components. In addition, we found that the positive relationship between pay disparity and bribery is weakened when the non-CEO executives have diverse demographic characteristics, and it is strengthened if the CEO is demographically similar to the other executives. This study contributes to the literature on corruption and TMTs by revealing the implications of managerial incentives for firm bribery and by elucidating the role of TMT composition.

Keywords: pay disparity; bribery; top management teams; CEO–TMT interface (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/15/4/3805/pdf (application/pdf)
https://www.mdpi.com/2071-1050/15/4/3805/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:15:y:2023:i:4:p:3805-:d:1073842

Access Statistics for this article

Sustainability is currently edited by Ms. Elaine Li

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().