Salary Gaps and Commercial Credit Financing in Chinese-Listed Firms: Roles of Ownership and Performance

Abstract

Efficient access to financing is crucial for corporate sustainability, yet internal governance’s impact on commercial credit financing remains underexplored in emerging markets. This study employed secondary data to investigate the influence of salary gaps on commercial credit financing and firm performance using a seven-year panel dataset of A-share listed firms on the Shanghai and Shenzhen Stock Exchanges from 2014 to 2020. The study examines the effect of executive salary gaps on commercial credit financing, considering the mediating role of financing performance and the moderating effect of ownership structure. Panel regression analysis, bootstrap mediation testing, propensity score matching (PSM), and two-stage least squares (2SLS) were applied to ensure robustness and address endogeneity. Findings reveal that salary gaps significantly affect commercial credit financing. Moderate pay differentials improve financing capacity, whereas excessive disparities weaken financing outcomes. Financing performance, measured by return on equity, partially mediates the relationship, suggesting that compensation structures influence financing through their effect on firm profitability. Ownership structure moderates the relationship, with stronger effects observed in private and mixed-ownership firms than in state-owned enterprises. Robustness tests confirm the stability of the findings. The study highlights the importance of balanced compensation design, effective governance, and diversified financing channels in improving financing efficiency, and provides implications for corporate management and financing policy in emerging markets.