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This study explores the relationship between the compensation gap within the top management team (TMT) and corporate performance. We focus on how the fairness preference of the TMT moderates this relationship. The existing researches on the relationship between the compensation gap within the TMT and corporate performance are inconclusive. The reason may be that the traditional tournament theory is based on the hypothesis of self-interest preference of homo economicus. In the research, the fairness preference theory is added to the traditional tournament model, and a more realistic tournament model considering fairness preference is constructed. Based on the analysis of the theoretical model and the empirical regression analysis of the panel data of 733 non-financial A-share listed companies in Shanghai and Shenzhen stock markets from 2014 to 2020, we draw the following main conclusions: (1) There is an inverted U-shaped relationship between the TMT compensation gap and the corporate performance. Within the optimal compensation gap, there is a significant positive correlation. The larger the compensation gap, the better the corporate performance will be. When the optimal compensation gap is exceeded, there is a significant negative correlation. The larger the compensation gap, the worse the corporate performance will be. (2) The fairness preference of the TMT will weaken the correlation between the TMT compensation gap and corporate performance. Within the optimal compensation gap, the fairness preference will weaken the positive relationship between them, and when it exceeds the optimal compensation gap, the fairness preference will also weaken the negative relationship between them., Competing Interests: The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest., (Copyright © 2022 Wang, Chen, Zhou and You.)

The current study investigates whether tournament incentives motivate chief executive officer(s) (CEOs) to be socially responsible. Furthermore, it explores the role of sub-national institutional contingencies [i.e., state-owned enterprises (SOE) vs. non-SOEs, foreign-owned entities (FOE) vs. non-FOEs, cross-listed vs. non-cross-listed, developed region] in CEO tournament incentives and the corporate social responsibility performance (CSRP) relationship. Data were collected from all A-shared companies listed in the stock exchanges of China from 2014 to 2019. The study uses the baseline methodology of ordinary least squares (OLS) and cluster OLS regression. Moreover, firm-fixed effects regression, two-stage least squares regression, and propensity score matching deal with the endogeneity problem and check the robustness of the results. The results provide reliable evidence that tournament incentives motivate CEOs to be more socially responsible. On the other hand, sub-national institutional contingencies positively affect the association between CEO tournament incentives and CSRP. The findings have important implications for companies and regulators who wish to enhance CSP by providing incentives to top managers., Competing Interests: The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest., (Copyright © 2022 Khan, Ali, Zahid, Huo and Nazir.)

Relying on tournament theory and environmental management research, we examine how CEO tournament incentives induce top executives to invest more in green innovation. Using a sample of Chinese listed companies from 2010 to 2016, we find evidence that CEO tournament incentives are positively associated with green innovation. In addition, we find that a positive relationship between CEO tournament incentives and green innovation is stronger in state-owned enterprises than in non-state-owned enterprises. These results support tournament theory, which proposes that better incentives induce top executives' efforts to win the tournament incentives, and such efforts are subject to fiercer competition among employees, which improves firms' social and financial performance. Moreover, our findings have implications for policy makers and regulators who wish to enhance environmental legitimacy by providing tournament incentives to top executives.