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She’-E-O Compensation Gap: A Role Congruity View

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Abstract

Is there a compensation gap between female CEOs (She’-E-Os) and male CEOs? If so, are there mechanisms to mitigate the compensation gap? Extending role congruity theory, we argue that the perception mismatch between the female gender role (that assumes communal traits) and the leadership role (that assumes agentic traits) may lead to lower compensation to female CEOs, resulting in a gender compensation gap. Nevertheless, the compensation gap may be narrowed if female CEOs display agentic traits through risk-taking, or alternatively, work in female-dominated industries where communal traits are valued. Additionally, we expect that female CEOs’ risk-taking is less effective in reducing the gender compensation gap in female-dominated industries due to the conflicting emphases on agentic and communal traits. Leveraging a sample of Chinese publicly listed firms, we find support for our hypotheses. Overall, this study contributes to the ethics literature on income inequality issues, by highlighting the effectiveness of potential mechanisms to close the gender compensation gap between female and male CEOs.

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Notes

  1. Because the dependent variable—CEO compensation—is log-transformed, we should interpret the coefficients using the eβ − 1 formula to obtain the ratio of change in compensation. For example, in Model 2, the coefficient for female CEO is − 0.0549, indicating that female CEOs earn 5.34% (1 − e−0.0549) less than male CEOs.

  2. Results are available upon request.

  3. We also use (1) stock return volatility, (b) cash flow volatility, and (c) capital expenditure as alternative measures of risk-taking. H2 receives consistent support. These results are available upon request.

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Authors and Affiliations

  1. Jindal School of Management, University of Texas at Dallas, 800 West Campbell, SM 43, Richardson, TX, 75080, USA

    Joyce C. Wang, Lívia Markóczy & Mike W. Peng

  2. Manning School of Business, University of Massachusetts Lowell, 220 Pawtucket Street, Lowell, MA, 01854, USA

    Sunny Li Sun

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  1. Joyce C. Wang
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Correspondence to Joyce C. Wang.

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Wang, J.C., Markóczy, L., Sun, S.L. et al. She’-E-O Compensation Gap: A Role Congruity View. J Bus Ethics 159, 745–760 (2019). https://doi.org/10.1007/s10551-018-3807-4

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