Do Good, Pay Fairly? How Corporate Charitable Donations Affect Internal Pay Gap

As corporate charitable donations have become a prominent form of corporate social responsibility (CSR), their impact on internal pay fairness remains unsettled. Empirical evidence from Chinese listed firms between 2010 and 2023 shows that corporate charitable donations narrow the executive–employee pay gap. Mechanism tests based on signaling theory reveal that charitable donations narrow the pay gap by increasing the reputation pressure faced by firms. In the signal transmission stage, CSR-related disclosure strengthens the positive effect of charitable donations on reputation pressure. In the signal processing stage, as firm governance capability improves, the negative effect of reputation pressure on the pay gap strengthens. Revealing the mechanism and boundary by which corporate charitable donations narrow the pay gap, the paper demonstrates how charitable donations enter the incentive system through the reputation-pressure channel and offers new insights into the integration of external social responsibility efforts with internal governance.