LAUSR

Taking the low‐carbon city pilot policy as a quasi‐natural experiment and using the data of Chinese listed companies, this paper examines the impact and mechanism of low‐carbon city pilot policy on the firms' executive‐employee pay gap. The results show that the implementation of low‐carbon city pilot policy significantly promotes the executive‐employee pay gap. Mechanism analysis results show that the low‐carbon city pilot policy promotes the executive‐employee pay gap mainly by enhancing the risks of enterprises' environmental violations and increasing management complexity. Heterogeneity analysis shows that the promoting effects of the pilot policy are more obvious in state‐owned enterprises, large‐scale enterprises, high‐carbon emission enterprises, and enterprises in labor‐intensive industries. The paper provides a decision‐making reference for coordinating common prosperity progress and corporate high‐quality development in the context of carbon reduction transformation.