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Executive pay gap and corporate ESG greenwashing: Evidence from China

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  • Li, Menghan
  • Chen, Qi

Abstract

With the increasing global influence of ESG, the phenomenon of greenwashing is gradually spreading to the ESG field. Using a sample of Chinese A-share listed companies from 2011 to 2021, we examine the impact of the executive pay gap on corporate ESG greenwashing. The findings suggest that the executive pay gap significantly exacerbates corporate ESG greenwashing. Mechanism analysis shows that the exacerbating effect is achieved by increasing the level of risk-taking. Heterogeneity analysis highlights that the impact of the executive pay gap on corporate ESG greenwashing varies across different internal driving factors and external governance effects. Specifically, this exacerbating effect is more pronounced in firms with low executive environmental awareness, high levels of surplus management and financing constraints, and those subject to lax environmental regulations and low levels of media scrutiny. These findings provide empirical evidence of the negative impact of the executive pay gap on corporate sustainability and offer valuable insights for improving corporate governance structure and regulating corporate ESG greenwashing.

Suggested Citation

  • Li, Menghan & Chen, Qi, 2024. "Executive pay gap and corporate ESG greenwashing: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 95(PA).
    • Handle: RePEc:eee:finana:v:95:y:2024:i:pa:s1057521924003077
    DOI: 10.1016/j.irfa.2024.103375
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    Cited by:

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    2. Eleni Poiriazi & Georgia Zournatzidou & George Konteos & Nikolaos Sariannidis, 2025. "Analyzing the Interconnection Between Environmental, Social, and Governance (ESG) Criteria and Corporate Corruption: Revealing the Significant Impact of Greenwashing," Administrative Sciences, MDPI, vol. 15(3), pages 1-18, March.
    3. Xiong, Jiacai & Yang, Zelin & Wang, Qing Sophie, 2025. "Can non-punitive regulation curb corporate greenwashing?Evidence from a word embedding model," Research in International Business and Finance, Elsevier, vol. 76(C).
    4. Li Wang & Hongyu Yang, 2024. "Digital technology innovation and corporate ESG performance: evidence from China," Economic Change and Restructuring, Springer, vol. 57(6), pages 1-32, December.
    5. Kaile Li & Tzu-Yu Lin & Guifang Zhu, 2024. "The effect of CEO’s compensation in driving corporate ESG greenwashing: Evidence from China," PLOS ONE, Public Library of Science, vol. 19(10), pages 1-22, October.
    6. Huang, Yujie & Liu, Shucheng & Gan, Jiawu & Liu, Baoliu & Wu, Yuxi, 2024. "How does the construction of new generation of national AI innovative development pilot zones drive enterprise ESG development? Empirical evidence from China," Energy Economics, Elsevier, vol. 140(C).

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