The Impact of Common Ownership on the Internal Pay Gap: Evidence from China

Xintong Cheng ()
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Xintong Cheng: China Agricultural University

A chapter in Proceedings of the 2026 11th International Conference on Social Sciences and Economic Development (ICSSED 2026), 2026, pp 620-636 from Springer

Abstract: Abstract Common ownership across firms has become an important external governance force. This paper studies the impact of common ownership on the internal pay gap between executives and ordinary employees using a sample of A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2012 to 2024. I find that a denser common ownership network significantly reduces the internal pay gap. Mechanism analyses reveal that common ownership narrows the pay gap by improving managerial efficiency, reducing tunneling behavior, and promoting human capital upgrading. The effect is stronger in firms with higher internal control quality, no analyst coverage, and stronger ownership checks and balances. These findings highlight the role of common ownership in corporate governance and income distribution.

Keywords: Common Ownership; Internal Pay Gap; Corporate Governance (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-701-9_63

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