Boardroom gender diversity and CEO pay deviation: Australian evidence

Ahmed, A., Atif, M. and Gyapong, E. (2020), Boardroom gender diversity and CEO pay deviation: Australian evidence. Account Finance. doi:10.1111/acfi.12696

Posted: 25 Jan 2018 Last revised: 17 Sep 2020

See all articles by Ammad Ahmed

Ammad Ahmed

Queensland University of Technology

Muhammad Atif

Macquarie University - Department of Accounting and Corporate Governance

Ernest Gyapong

Zayed University - College of Business

Date Written: September 16, 2020

Abstract

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.

Keywords: women on corporate boards, pay deviation, under paid CEO, overpaid CEO

JEL Classification: M14, M41

Suggested Citation

Ahmed, Ammad and Atif, Muhammad and Gyapong, Ernest, Boardroom gender diversity and CEO pay deviation: Australian evidence (September 16, 2020). Ahmed, A., Atif, M. and Gyapong, E. (2020), Boardroom gender diversity and CEO pay deviation: Australian evidence. Account Finance. doi:10.1111/acfi.12696, Available at SSRN: https://ssrn.com/abstract=3109073

Ammad Ahmed (Contact Author)

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland
Australia

Muhammad Atif

Macquarie University - Department of Accounting and Corporate Governance ( email )

Sydney, NSW 2109
Australia

Ernest Gyapong

Zayed University - College of Business ( email )

P.O. Box 4783
Abu Dhabi
United Arab Emirates

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