Download this Paper Open PDF in Browser

Executive Gender Pay Gaps: The Roles of Female Risk Aversion and Board Representation

45 Pages Posted: 2 Oct 2014 Last revised: 14 Mar 2017

Mary Ellen Carter

Boston College - Department of Accounting

Francesca Franco

London Business School

Mireia Gine

IESE Business School, University of Navarra ; The University of Pennsylvania

Date Written: April 5, 2016

Abstract

Using a large sample of executives in S&P1500 firms over 1996-2010, we document significant salary and total compensation gaps between female and male executives and explore two possible explanations for the gaps. We find support for greater female risk aversion as one contributing factor. Female executives hold significantly lower equity incentives and demand larger salary premiums for bearing a given level of compensation risk. These results suggest that females’ risk aversion contributes to the observed lower pay levels through its effect on ex-ante compensation structures. We also find evidence that the lack of gender diversity on corporate boards affects the size of the gaps. In firms with a higher proportion of female directors on the board, the gaps in salary and total pay levels are lower. Together, these findings suggest that female higher risk aversion may act as a barrier to full pay convergence, despite the mitigating effect from greater gender diversity on the board.

Keywords: Female executive pay; risk aversion; board diversity; corporate governance

JEL Classification: J31; J33; J71

Suggested Citation

Carter, Mary Ellen and Franco, Francesca and Gine, Mireia, Executive Gender Pay Gaps: The Roles of Female Risk Aversion and Board Representation (April 5, 2016). Contemporary Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2503883 or http://dx.doi.org/10.2139/ssrn.2503883

Mary Ellen Carter

Boston College - Department of Accounting ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Francesca Franco (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom

Mireia Gine

IESE Business School, University of Navarra ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

The University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Paper statistics

Downloads
523
Rank
43,041
Abstract Views
2,603