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Boardroom gender diversity and CEO pay deviation: Australian evidence
Author(s) -
Ahmed Ammad,
Atif Muhammad,
Gyapong Ernest
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12696
Subject(s) - executive compensation , gender diversity , diversity (politics) , gender pay gap , matching (statistics) , demographic economics , sample (material) , compensation (psychology) , standard deviation , business , pay for performance , economics , accounting , econometrics , labour economics , corporate governance , psychology , incentive , statistics , social psychology , political science , microeconomics , finance , wage , law , chemistry , mathematics , chromatography
We study whether boardroom gender diversity affects CEO pay. Specifically, we investigate the association between boardroom gender diversity and CEO pay deviation from the optimal level of CEO pay based on firm characteristics and market performance. Using a sample of 2,288 firm‐year observations for the period 2006–2014, we find that boardroom gender diversity is negatively associated with CEO pay deviation, suggesting that firms with gender‐diverse boards are cautious about the consequences of CEO pay deviation (under/overpayment), and thus likely to bridge the gap between CEO actual pay and expected pay. These findings provide important insights to the global discussion on executive compensation. Our findings are robust to alternative variable specifications, propensity score matching, difference‐in‐differences estimations, and generalised method of moments.