Buddhist influence and the executive-employee pay gap: An institutional contingency framework

Abstract

<p>Although the connection between religion and ethical corporate behavior has been extensively studied, it is unclear whether the influence of Buddhism, an important normative institution, affects executive-employee pay gap. Drawing on institutional theory, this study examines how three institutional pillars (legal development, media coverage, and CEO overseas experience) moderate the relationship between Buddhist influence and executive-employee pay gap. Using a sample of 14,761 firm-year observations covering 2,193 listed firms in China, we found that the influence of Buddhism is negatively associated with the executive-employee pay gap. In addition, the negative effect is stronger when firms operate in regions with better legal development and when they have high media coverage but becomes weaker when executives have overseas experience. These findings confirm the mitigating effect of Buddhist influence on inter-class pay inequity and highlight the contingent role of institutions.<br></p>