The Impact of Firm Pay Gap on The New Quality Productive Forces

This paper takes A-share listed companies in China's Shanghai and Shenzhen markets from 2011 to 2022 as a research sample to test whether the pay gap in listed companies will promote the development of new quality productive forces. The empirical research results show that the widening of the pay gap between executives and employees within listed companies can promote the improvement of new quality productive forces, and this effect is mainly achieved through three channels of reducing inefficient investment, reducing excess employment, and increasing innovation. At the same time, the paper also finds that both the concentration of executive pay and the level of financial flexibility of listed firms play a moderating role in this effect; specifically, the concentration of executive pay and the level of financial flexibility amplify the contribution of the pay gap to the new quality productive forces of listed companies. The results of this paper are robust after accounting for endogenous problems.