Work

Confucian culture and the external pay gap

Year: 2023

Type: article

Abstract: We examine the impact of Confucian philosophy on external pay gaps, and find that a Confucianist atmosphere is negatively associated with firms’ external pay gaps for both executives and employees. Mechanistically, the Confucian concept of “righteousness” reduces the self-interested motivation of management, in turn reducing executives’ external pay gap; “humaneness” causes management to focus on protecting employees’ rights and interests, benefiting employees’ compensation; and “honesty” improves information disclosure, reducing the external compensation gap for both executives and general employees. The inhibitory effect of Confucian culture on the external pay gap is greater in regions with weak formal institutions and non-state-owned firms, while foreign cultural shocks attenuate the Confucian influence. Finally, the Confucian culture-driven reduction of the external pay gap improves enterprises’ economic efficiency.

Source: China Journal of Accounting Research

DOI: 10.1016/j.cjar.2023.100291

Authors: Weimin Xie, Jialu Guo, Hengxin Zhang

Institution: Dongbei University of Finance and Economics

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,800