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Energy related public environmental concerns and intra-firm pay gap in polluting enterprises: Evidence from China

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  • Ho, Kung-Cheng
  • Yan, Cheng
  • Gozgor, Giray
  • Gu, Yan

Abstract

This study empirically investigates the impact of energy related public environmental concerns on the pay gap within polluting companies. It uses the extreme environmental event of the PM2.5 surge at the end of 2011, which led to an upsurge in energy related public environmental concerns in China, as a quasi-natural experiment. According to our findings, energy related public environmental concerns lead to a significant increase in the executive–employee pay gap of polluting companies compared to that of non-polluting companies, owing to a significant increase in executive compensation and no significant change in employee income. The effect of energy related public environmental concerns on increasing the pay gap within polluting companies is more significant in samples with high agency costs, poor information transparency, less analyst follow-up, and fewer institutional investors' shareholding. Furthermore, as energy related public environmental concerns exacerbate the polluting firms' internal pay gap, their total factor productivity and investment efficiency fall significantly. In summary, energy related public environmental concerns not only widen the wage gap within polluting enterprises but also worsen their operational and investment efficiency, which has important policy implications for emerging market economies seeking to balance environmental protection and economic development.

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  • Ho, Kung-Cheng & Yan, Cheng & Gozgor, Giray & Gu, Yan, 2024. "Energy related public environmental concerns and intra-firm pay gap in polluting enterprises: Evidence from China," Energy Economics, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:eneeco:v:130:y:2024:i:c:s0140988324000288
    DOI: 10.1016/j.eneco.2024.107320
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    More about this item

    Keywords

    Public environmental concerns; Intra-firm pay gap; Polluting enterprises; PM2.5 surge; Emerging economies;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-

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