Religious Tradition and Employee Compensation

Abstract

This study investigates the relation between Buddhist tradition and employee compensation. Using a large sample of Chinese listed companies from 2007 through 2017, we find that the average employee compensation is higher in companies located in more religious areas. This effect is more pronounced during the 2007−2009 financial crisis.Additional analyses indicate that these companies have smaller pay disparity between executives and employees and are ranked higher in the employee relationship component of corporate social responsibility (CSR). These findings contribute to our understanding of the relation between religious tradition and employee compensation and provide insights into how social norms can influence corporate practices.