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Climate risk and internal pay gap

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  • Kong, Xiaolin
  • Boubaker, Sabri
  • Jiang, Yong
  • Ren, Yi-Shuai

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.

Suggested Citation

  • Kong, Xiaolin & Boubaker, Sabri & Jiang, Yong & Ren, Yi-Shuai, 2026. "Climate risk and internal pay gap," Finance Research Letters, Elsevier, vol. 92(C).
    • Handle: RePEc:eee:finlet:v:92:y:2026:i:c:s1544612326000620
    DOI: 10.1016/j.frl.2026.109531
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