<p>How do accounting institutions participate in creating and perpetuating within-firm inequality? We investigate this question by examining China’s Golden Tax Phase III (GTP3) implementation, which provides a natural experiment to analyze how upgraded tax monitoring technology reshapes corporate benefit distribution patterns. Drawing on data from Shanghai and Shenzhen A-share listed companies spanning 2008 to 2023, we find that while GTP3 effectively constrains related-party transactions, firms simultaneously experience meaningful increases in pay inequality, revealing management’s strategic channel substitution behavior when facing asymmetric regulatory intensity across accounting domains. Our empirical analysis uncovers how firms achieve this substitution through restructuring expense composition and strengthening the performance-compensation linkage, cloaking benefit redistribution beneath legitimized incentive narratives. Findings are robust to a range of estimation approaches that account for the staggered provincial rollout of GTP3. Importantly, this substitution effect varies systematically across firms; managers possess greater operational latitude when accounting disclosures remain vague, when audit oversight focuses solely on formal compliance, and when board governance and institutional monitoring are weaker. Our findings reveal how differential institutional design in accounting regulation across domains creates operational space for managerial benefit redistribution, demonstrating that accounting institutions can inadvertently influence within-firm power dynamics and inequality patterns through asymmetric enforcement.</p>