IDEAS home Printed from https://ideas.repec.org/h/eme/rleczz/s0147-912120150000042001.html
   My bibliography  Save this book chapter

Gender and Dynamic Agency: Theory and Evidence on the Compensation of Top Executives☆

In: Gender in the Labor Market

Author

Listed:
  • Stefania Albanesi
  • Claudia Olivetti
  • María José Prados

Abstract

We document three new facts about gender differences in executive compensation. First, female executives receivelower share of incentive payin total compensation relative to males. This difference accounts for 93% of the gender gap in total pay. Second, the compensation of female executives displayslower pay-performance sensitivity. A $1 million dollar increase in firm value generates a $17,150 increase in firm-specific wealth for male executives and a $1,670 increase for females. Third, female executives aremore exposed to bad firm performanceand less exposed to good firm performance relative to male executives. We find no link between firm performance and the gender of top executives. We discuss evidence on differences in preferences and the cost of managerial effort by gender and examine the resulting predictions for the structure of compensation. We consider two paradigms for the pay-setting process, the efficient contracting model and the “managerial power” or skimming view. The efficient contracting model can explain the first two facts. Only the skimming view is consistent with the third fact. This suggests that the gender differentials in executive compensation may be inefficient.

Suggested Citation

  • Stefania Albanesi & Claudia Olivetti & María José Prados, 2015. "Gender and Dynamic Agency: Theory and Evidence on the Compensation of Top Executives☆," Research in Labor Economics, in: Gender in the Labor Market, volume 42, pages 1-59, Emerald Group Publishing Limited.
  • Handle: RePEc:eme:rleczz:s0147-912120150000042001
    DOI: 10.1108/S0147-912120150000042001
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S0147-912120150000042001/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S0147-912120150000042001/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S0147-912120150000042001
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S0147-912120150000042001/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/S0147-912120150000042001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hazan, Moshe & Cohen, Alma & Weiss, David, 2021. "Politics and Gender in the Executive Suite," CEPR Discussion Papers 14513, C.E.P.R. Discussion Papers.
    2. Anthony B. Atkinson & Alessandra Casarico & Sarah Voitchovsky, 2018. "Top incomes and the gender divide," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 225-256, June.
    3. Keller, Wolfgang & Molina, Teresa & Olney, William W., 2023. "The gender gap among top business executives," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 270-286.
    4. Dirk Dohse & Rajeev K. Goel & Michael A. Nelson, 2019. "Female owners versus female managers: Who is better at introducing innovations?," The Journal of Technology Transfer, Springer, vol. 44(2), pages 520-539, April.
    5. Xiaocheng Hu, 2022. "The role of manager's gender in mentoring: Evidence in the United Kingdom," LABOUR, CEIS, vol. 36(3), pages 389-407, September.
    6. Canil, Jean & Karpavičius, Sigitas & Yu, Chia-Feng, 2019. "Are shareholders gender neutral? Evidence from say on pay," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 169-186.
    7. Lalanne, Marie & Seabright, Paul, 2016. "The old boy network: The impact of professional networks on remuneration in top executive jobs," SAFE Working Paper Series 123, Leibniz Institute for Financial Research SAFE.
    8. Paul M. Guest, 2017. "Executive Compensation and Ethnic Minority Status," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(3), pages 427-458, July.
    9. Nishtha Langer & Ram D. Gopal & Ravi Bapna, 2020. "Onward and Upward? An Empirical Investigation of Gender and Promotions in Information Technology Services," Information Systems Research, INFORMS, vol. 31(2), pages 383-398, June.
    10. Sieg, Holger & Wang, Yu, 2018. "The impact of student debt on education, career, and marriage choices of female lawyers," European Economic Review, Elsevier, vol. 109(C), pages 124-147.
    11. Jaan Masso & Priit Vahter, 2020. "Innovation As A Firm-Level Factor Of The Gender Wage Gap," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 128, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    12. Holger Sieg & Yu Wang, 2017. "The Impact of Student Debt on Education, Career, and Marriage Choices of Female Lawyers," NBER Working Papers 23453, National Bureau of Economic Research, Inc.
    13. Fernandes, Ana P. & Ferreira, Priscila, 2021. "Executives’ gender pay gap and financing constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 381-404.
    14. Casarico, A. & Lattanzio, S., 2019. "What Firms Do: Gender Inequality in Linked Employer-Employee Data," Cambridge Working Papers in Economics 1966, Faculty of Economics, University of Cambridge.
    15. Alicia R. Ingersoll & Christy Glass & Alison Cook & Kari Joseph Olsen, 2019. "Power, Status and Expectations: How Narcissism Manifests Among Women CEOs," Journal of Business Ethics, Springer, vol. 158(4), pages 893-907, September.

    More about this item

    Keywords

    Gender differences in executive pay; incentive pay; pay-performance sensitivity; G3; J16; J31; J33; M12;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:rleczz:s0147-912120150000042001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.