Does Gender Diversity in the Boardroom Matter? Evidence from CEO Inside Debt Compensation

58 Pages Posted: 17 May 2019

See all articles by Vikram K. Nanda

Vikram K. Nanda

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Andrew K. Prevost

University of Vermont

Arun Upadhyay

Florida International University (FIU)

Date Written: May 6, 2019

Abstract

We show gender diverse boards offer compensation packages that incentivize CEOs to adopt strategies that lower risk and promote long-term firm survival. Appointment (exogenous departure) of independent female directors is followed by higher (lower) CEO pension compensation. Instrumental variable tests, exploiting geographic variation in supply of female directors, suggest effects are causal. Consistent with greater incentive alignment with bondholders, announcements of female director appointments are associated with decreases in yield spreads. We find no evidence of wealth transfer from equity investors to bondholders: Stock prices of firms, especially those with high-yield debt, react positively when female director appointments are announced.

Keywords: Gender diversity, Boards, Inside debt, Pensions, CEO compensation, Bond yields

JEL Classification: G32, G34, J32, J33, M52

Suggested Citation

Nanda, Vikram K. and Prevost, Andrew K. and Upadhyay, Arun, Does Gender Diversity in the Boardroom Matter? Evidence from CEO Inside Debt Compensation (May 6, 2019). Available at SSRN: https://ssrn.com/abstract=3383644 or http://dx.doi.org/10.2139/ssrn.3383644

Vikram K. Nanda

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States

Andrew K. Prevost

University of Vermont ( email )

Burlington, VT 05405
United States

Arun Upadhyay (Contact Author)

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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