Religious Institutional Environment and Executive Pay Dispersion

Abstract

This study extends the extant literature on executive pay dispersion by exploring the cultural-cognitive social determinants. We investigate how religious institutional environments, including Buddhism- and Confucianism-based institutions, shape vertical executive pay dispersion. We theorize that a Buddhism-based institutional environment is negatively related to vertical executive pay dispersion. In contrast, we propose competing hypotheses regarding how a Confucianism-based institutional environment affects vertical executive pay dispersion. With a sample of Chinese public firms, we find that both Buddhism- and Confucianism-based institutional environments are negatively associated with a firm's vertical executive pay dispersion. Supplementary analyses show that the aforementioned main effects are attenuated when a firm is embedded by a communist party branch and has a younger CEO.