Executives’ poverty experience and internal and external pay disparities: Evidence from China

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Authors: Jin Huang, Dongling Li, Fei Guo
Cited by: 0
References: 64

Abstract

We show that executives’ early-life poverty experiences reduce both internal (executive–employee) and external (executive–peer) corporate pay disparities. Three mechanisms drive this effect: increased risk aversion in poverty-exposed executives, strategic avoidance of negative media coverage to protect reputation and curtailment of excessive executive perks. The results hold under multiple robustness tests. The poverty–equity link intensifies in state-owned enterprises, eastern-region firms, labor-intensive industries, firms with elevated donations, and firms led by executives with advanced degrees. This pay gap reduction primarily stems from restrained executive compensation, particularly when it exceeds industry benchmarks, rather than increased employee wages. These findings advance behavioral agency theory by revealing how leaders’ socioeconomic origins interact with institutional contexts to reshape compensation systems, offering new insights into inequality management.

Fields of Study & Subjects

Corporate Finance and Governance Experimental Behavioral Economics Studies Culture Economy and Development Studies

Publication details

Journal / source
China Journal of Accounting Research
Volume
19
Issue
1
Pages
100458–100458
Publication date
5 January 2026
Language
EN