China's Anti-Corruption Campaign and Internal Pay Gap: Evidence from a Quasi-Natural Experiment of Inspection Supervision Campaign

Narrowing the income gap between groups has become an urgent issue for promoting common prosperity in China. This study systematically examines the impact of the Chinese Communist Party's inspection supervision on the internal pay gap in A-share-listed companies. We found that inspection supervision could significantly reduce this gap by lowering agency costs and corporate performance volatility. Furthermore, the impact is concentrated in firms with greater involvement in party organizations, lower marketization, and higher institutional shareholdings. Overall, this evidence supports the notion that anti-corruption campaigns could shape this gap in China.