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Gender Differences in Executive Compensation on British Corporate Boards: the Role of Conditional Conservatism

Author

Listed:
  • Habiba Al-Shaer

    (Newcastle University Business School, Newcastle University, Newcastle Upon Tyne NE1 7RU, UK)

  • Mostafa Harakeh

    (Adnan Kassar School of Business, Lebanese American University, Beirut Campus, P.O. Box 13-5053, Chouran Beirut 1102 2801, Lebanon)

Abstract

We exploit the effectiveness of the [Davies Report (2011). Women on Boards. London: Department for Business, Innovation & Skills], which urged FTSE 350 companies to increase female representation on corporate boards, to examine the potential effect that this may have on the gender pay differential at the executive level. To this end, we employ a multivariate regression and a difference-in-differences approach that compare executive compensation between all-male executive boards and boards with at least one female executive. Using a sample of FTSE 350 companies that spans the period 2008–2015, we find that differential executive compensation exists in bonus and equity compensation following the Davies Report (2011). Given that the differential compensation exists in the components primarily determined by the firm’s reported earnings and that female directors are prone to exhibit higher conditional conservatism in their financial reporting, we examine whether the firm’s financial reporting practice plays a role in determining the differential executive compensation. Our investigation reveals that the presence of female executive directors on the board makes the effect of conditional conservatism more prominent, resulting in lower bonus and equity-based compensation.

Suggested Citation

  • Habiba Al-Shaer & Mostafa Harakeh, 2020. "Gender Differences in Executive Compensation on British Corporate Boards: the Role of Conditional Conservatism," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 1-48, March.
    • Handle: RePEc:wsi:tijaxx:v:55:y:2020:i:01:n:s109440602050002x
    DOI: 10.1142/S109440602050002X
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    Citations

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    Cited by:

    1. Mostafa Harakeh & Ghida Matar & Nagham Sayour, 2020. "Information asymmetry and dividend policy of Sarbanes-Oxley Act," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(6), pages 1507-1532, April.
    2. Sun, Li & Skousen, Christopher J., 2022. "CEO power and discontinued operations," Advances in accounting, Elsevier, vol. 58(C).
    3. Harakeh, Mostafa & Leventis, Stergios & El Masri, Tarek & Tsileponis, Nikolaos, 2023. "The moderating role of board gender diversity on the relationship between firm opacity and stock returns," The British Accounting Review, Elsevier, vol. 55(4).
    4. Sonia Yasin & Muhammad Irfan & Muhammad Shaukat Malik & Fasiha Nargis, 2022. "The Relationship between Executive Remuneration and Organizations Efficiency," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(3), pages 59-70, December.
    5. Hrazdil, Karel & Novak, Jiri, 2023. "Executive personality and the gender pay gap," Finance Research Letters, Elsevier, vol. 53(C).
    6. Guy Assaker & Wassim Shahin, 2022. "What Drives Faculty Publication Citations in the Business Field? Empirical Results from an AACSB Middle Eastern Institution," Publications, MDPI, vol. 10(4), pages 1-29, November.

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