Research Seminar by Prof.GOPAL KRISHNAN

The eighth research Seminar of the academic year 2023-24 was conducted by GOPAL KRISHNAN, Professor of Accounting and the coordinator of the Ph.D. program in Accounting at Bentley University, USA on the topic Do Female Friendly Boards Mitigate Gender Pay Gap Among Directors?

Abstract of the talk 

Gender pay gap is a detriment to economic growth. We examine whether there is a difference in compensation paid to female and male directors of U.S. firms. Controlling for several director- and firm- level attributes, we find that the level of cash compensation is similar for female and male directors but both equity compensation and total compensation are significantly lower for female directors. On average, female directors earn $7,000 less than males. However, if the chair of the board is a female, the total compensation for female directors increases by $43,000 on average. Similarly, when female directors have a super majority, female directors receive higher total compensation than male directors. These results indicate that female-friendly boards mitigate gender pay gap among directors. In high-litigation risk industries, we do not observe a gender gap in director compensation but in low-litigation risk industries, female directors are associated with less equity compensation and total compensation. Also, female directors serving on multiple boards receive less equity compensation than
male directors. We also find that despite the lower compensation, female directors are associated with higher financial reporting
quality and higher CEO compensation-performance sensitivity, suggesting better monitoring than their male counterparts. Finally, audit committee directors are associated with both lower equity compensation and total compensation than non-audit committee directors. Our results are robust to including firm fixed effects as well as excluding firms with only one female director. To address endogeneity concerns, we use a sample of directors who change jobs because of delisting of their former employers and find that following the switch, female directors are associated with lower equity compensation and total compensation

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