Climate risk and internal pay gap

Xiaolin Kong, Sabri Boubaker (), Yong Jiang and Yi-Shuai Ren
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Xiaolin Kong: JUFE - Jiangxi University of Finance and Economics
Sabri Boubaker: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School
Yong Jiang: SIAP - Shanghai Institute of Applied Physics - CAS - Chinese Academy of Sciences [Changchun Branch] - CAS - Chinese Academy of Sciences [Beijing] - Chinese Academy of Sciences [Wuhan Branch] - Chinese Academy of Sciences [Nanjing Branch] - Chinese Academy of Sciences [Xi’an]
Yi-Shuai Ren: HNU - Hunan University [Changsha]

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Abstract: This study examines the influence of climate risk on the internal pay gap of Chinese A-share listed firms from 2007 to 2022. We find that climate risk increases the average compensation of both employees and executives. More importantly, the pay gap is narrowed by both institutional investors' engagement and participation by controlling shareholders. In non-SOEs and non-heavily polluting firms, climate risks will have larger and more significant impacts on the pay gap. These findings enhance the theoretical framework of corporate governance in the context of climate-related uncertainty and help optimize compensation systems for climate risk.

Date: 2026-03
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Published in Finance Research Letters, 2026, 92, pp.109531. ⟨10.1016/j.frl.2026.109531⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05538934

DOI: 10.1016/j.frl.2026.109531

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