Abstract: By making use of the data of the A-share non-financial listed companies in Shanghai and Shenzhen Stock Exchanges from 2007 to 2017 and considering the specific situations of the enterprises which are registered in the Old Revolutionary Base Areas, this paper investigates the influence of the red culture on the internal pay gaps of enterprises. The findings show that the red culture can alleviate the pay gap between the management and the ordinary employees, and this effect is more significant in the enterprises controlled by private capitals, or having weaker internal supervision power, or being short of external competition. The result of the extended test also reveals that the “revolutionary examples” of the registration place and the growth experience of the chairman of the board at the old revolutionary base area can positively promote this effect of the red culture. This shows that “model” and “education” are two paths for the red culture to play its role. The research conclusion expands the research connotation of cultural factors from the perspective of finance, and reveals the corporate governance role of cultural factors hidden behind the “Old Revolutionary Base Areas”.

Key words: the Old Revolutionary Base Areas; red culture; pay gap; corporate governance; topographic relief