Will the Narrowing Pay Gap in Chinese State-owned Enterprises Improve Internal Control Quality?

Xiaofang Han, Hanwen Xu, Cheng Zhang, Yuxin Shen and Xiaoxi Lu

Emerging Markets Finance and Trade, 2022, vol. 58, issue 12, 3340-3354

Abstract: This paper examines the impact of pay gap on the quality of the internal control. Using state-owned enterprises listed in China from 2012 to 2019 as samples, we find new evidence of an inverted U-shaped relationship between the pay gap and internal control quality, which includes the executives’ internal pay gap, external pay gap, and executives-employees pay gap. Furthermore, we also find that there is an inverted U-shaped relationship between the pay gap and the internal control quality in state-owned enterprises with commercial competition, but we don’t find similar results for the samples of state-owned enterprises with specific functions. In addition, we provide evidence that the pay gap not only has a direct impact on internal control quality but also has an indirect impact on internal control quality through agency costs. This study supplements research on internal control quality from the perspective of incentives.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2022.2040986 (text/html)
Access to full text is restricted to subscribers.

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:mes:emfitr:v:58:y:2022:i:12:p:3340-3354

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2022.2040986

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().