CEO Compensation Gap between Gender and Women’s Risk-Averse Tendency

Abstract

This paper examines the CEO compensation gap between gender and the female CEOs’ risk preference for incentive. Previous studies argue that women in upper positions receive lower compensation and incentive than men due to their risk-averse tendency. Meanwhile, the literature suggests no significant difference in the CEO compensation gap between gender. Recently, the proportion of female CEOs has been increased significantly. Therefore, female CEOs' compensation levels may increase because of the demand for them. This study examines whether female CEOs significantly receive higher compensation than men. This study divided the sample into several periods to examine the significance level of CEO pay between gender. When investigating the differences in CEO compensation between genders by setting a period similar to the previous study, this study cannot find a significant difference in CEO pay between gender. However, when expanding the sample to the recent period, I confirm that female CEO receive significantly higher compensation than men. This finding suggests that CEO compensation gap between gender have become more significant in recent years. Moreover, this research demonstrates that female CEOs receive higher incentives than men and do not show risk-averse tendencies regarding incentive pay. It contradicts previous studies that women receive lower rewards because of their risk aversion tendency. This study contributes to alleviating the perception that women's risk-averse tendencies make them incompetent and receive lower compensation than men.

Keywords: Female CEOs, compensation gap between gender, women’s risk-averse tendency, risk-taking

JEL Classification: G32, M12, J16, J33