Abstract
The Chinese government has implemented the policies to regulate executive (CEO) pay in state-owned enterprises (SOEs) with the aim of promoting wage equality. This study examines whether these policies affect the motivation of CEOs to engage in green innovation (GI). By analyzing data from Chinese listed SOEs between 2008 and 2017, the study reveals an unintended environmental consequence of regulating CEO pay. We found a negative causal relationship between regulating CEO pay and GI. Moreover, we provide evidence that social capital act as a mitigating factor promotes cooperation and a shared sense of responsibility towards sustainable practices. Additionally, government subsidies provide financial incentives and support for businesses to invest in sustainable practices and technologies, which can offset the negative impact of CEO pay regulation on GI. The results of this study offer policy recommendations to encourage sustainable environmental initiatives; the government should increase its support for GI and introduce new incentives for managers. Overall the study findings are robust and remain valid even after conducting rigorous testing with instrumental variables and other robustness checks.
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Data availability
This study is based on secondary dataset. All the data are available on CSMAR (https://cn.gtadata.com) and Shenzhen Dibo Internal Database (http://www.ic-erm.com/).
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This work is supported by the National Social Science Foundation of China (Grant No. 18XJY024).
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Qian Li and Umer Sahil Maqsood: conceptualization, formula analysis, investigation, writing the original draft, data collection, methodology, and formal analysis. R.M. Ammar Zahid and Waseem Anwar: investigation, software, investigation, data correction, formula, and editing.
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Li, Q., Maqsood, U.S., Zahid, R.A. et al. Regulating CEO pay and green innovation: moderating role of social capital and government subsidy. Environ Sci Pollut Res (2023). https://doi.org/10.1007/s11356-023-26641-x
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DOI: https://doi.org/10.1007/s11356-023-26641-x