The Importance of Signaling for Women's Careers

75 Pages Posted: 20 Dec 2021 Last revised: 26 May 2023

See all articles by Alexandra Niessen-Ruenzi

Alexandra Niessen-Ruenzi

University of Mannheim, Department of Finance; University of Mannheim - Department of Finance

Leah Zimmerer

University of Mannheim - Finance Area; University of Mannheim - Graduate School of Economic and Social Sciences

Date Written: December 17, 2021

Abstract

We show that signals of leadership qualification are more important for women's career advancement than for men's. Specifically, signals of higher education, professional experience and access to professional networks increase male directors' probability to enter a leadership position by 5.2%, and their compensation by 5.7% ($246,900). Female directors with these signals are 11.0% more likely to enter a leadership position, and their compensation is 19.7% ($796,800) higher. This result is in line with models of screening discrimination, in which women need to provide more observable skill signals to counterbalance higher uncertainty about their unobservable qualifications for a leadership position. Supporting this channel, we find that our results are stronger if information asymmetries between (mostly) male employers and female candidates are larger: successions after the sudden death of a CEO, successions in firms with all-male nomination committees, and outside hires.

Keywords: Signaling, Gender differences, Leadership, Executive Compensation

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

Suggested Citation

Niessen-Ruenzi, Alexandra and Niessen-Ruenzi, Alexandra and Zimmerer, Leah, The Importance of Signaling for Women's Careers (December 17, 2021). European Corporate Governance Institute – Finance Working Paper No. 888/2023, Available at SSRN: https://ssrn.com/abstract=3987238 or http://dx.doi.org/10.2139/ssrn.3987238

Alexandra Niessen-Ruenzi

University of Mannheim, Department of Finance ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181 1595 (Phone)

University of Mannheim - Department of Finance ( email )

Mannheim, 68131
Germany

Leah Zimmerer (Contact Author)

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

University of Mannheim - Graduate School of Economic and Social Sciences ( email )

D7, 27
Mannheim, 68131
Germany

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