The Importance of Signaling for Women's Careers

Abstract

Signals of leadership qualification, specifically higher education and professional experience, are more important for women's career advancement than men's. For male directors, these signals increase the probability of entering a leadership position by 6.0% and raise their compensation by 6.8% ($294,800). Female directors are 12.9% more likely to enter a leadership position, and their compensation is 24.2% ($979,400) higher. Results are stronger when information asymmetries are larger: successions after the sudden death of a CEO and in firms with all-male nomination committees, outside hires, and lack of board connections, suggesting that statistical discrimination plays a significant role in these outcomes.

Keywords: Signaling, Gender differences, Corporate Governance, Executive Compensation

JEL Classification: A14, G34, G35, J16, J31