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How Much Does the Board Composition Matter? The Impact of Board Gender Diversity on CEO Compensation

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  • Tasawar Nawaz

    (Plymouth Business School, University of Plymouth, Plymouth PL4 8AA, UK)

Abstract

The notion that female directors are better disposed to protect shareholders’ interests has brought boardroom gender diversity into the limelight. Echoing these emerging trends, this paper analyzes the relationship between board gender diversity, i.e., proportion of female directors on the corporate board, and Chief Executive Officer’s (CEO) compensation. Consistent with conjecture, the analysis suggests that large and diversified corporate boards are the main determinants of CEO compensation. Furthermore, longer-tenured CEOs who also serve as board chairperson receive higher total compensation and bonuses than their counterparts do. Into the bargain are corporate performance proxied by return of assets (ROA) and firm attributes, i.e., firm size and institutional ownership, which have divergent but direct implications for CEO compensation.

Suggested Citation

  • Tasawar Nawaz, 2022. "How Much Does the Board Composition Matter? The Impact of Board Gender Diversity on CEO Compensation," Sustainability, MDPI, vol. 14(18), pages 1-15, September.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:18:p:11719-:d:918408
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    References listed on IDEAS

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    Cited by:

    1. Mohit Pathak & Arti Chandani, 2023. "Board composition, executive compensation, and financial performance: panel evidence from India," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(4), pages 359-373, December.
    2. Augustine Donkor & Terri Trireksani & Hadrian Geri Djajadikerta, 2023. "Board Diversity and Corporate Sustainability Performance: Do CEO Power and Firm Environmental Sensitivity Matter?," Sustainability, MDPI, vol. 15(23), pages 1-24, November.

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