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Lookup NU author(s): Dr Habiba Al-Shaer
This is the authors' accepted manuscript of an article that has been published in its final definitive form by World Scientific Publishing, 2020.
For re-use rights please refer to the publisher's terms and conditions.
We exploit the release of the Davies Report (2011) that urged FTSE350 companies to increase female representation on corporate boards to examine the potential effect this may have on the gender pay gap at the executive level. Using a sample of FTSE350 companies that spans the period 2008-2015, we document significant gaps in total compensation and compensation components. We then examine whether this gap has diminished following the Davies Report (2011). We find that the gap in executive salaries is offset but still exists in bonus and equity compensation after controlling for the Davies effect. The fact that the gender pay gap exists in the components that are mainly determined by the firm’s reported earnings has triggered us to examine whether financial reporting practice plays a role in explaining this gap. Our investigation reveals that boards with female executives exhibit more conditional conservatism in their reported earnings compared to all-male executive boards, resulting in lower bonus and equity compensation. We conclude that the increased presence of female executives on corporate boards leads to a lower gap in salary between female and male executives, and that female executives play a moderating role on performance-based compensation through their conservative financial reporting practices.
Author(s): Al-Shaer H, Harakeh M
Publication type: Article
Publication status: Published
Journal: The International Journal of Accounting
Print publication date: 01/03/2020
Online publication date: 14/04/2020
Acceptance date: 02/07/2019
Date deposited: 17/07/2019
ISSN (print): 1094-4060
ISSN (electronic): 2213-3933
Publisher: World Scientific Publishing
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