Revisiting the gender gap in CEO compensation: rectifying conflictive findings by correcting Gupta, Mortal, and Guo’s (2018) misapplication of absorption in unbalanced panel

Abstract

Purpose

Many scholars and practitioners lament female pay gaps and the ethical issues they pose; yet several studies provide supporting evidence showing that the female CEOs earn more than men. However, other studies find an insignificant difference between male and female CEO pay. 10; The purpose of this study is to re-investigate this question to uncover the root of the divergent findings and thereby clarify our understanding of this important issue of CEOs’ gender pay gaps.

Design/methodology/approach

Evidence suggests the CEO position is at times a rare instance where typical pay gaps for female workers reverse such that these executives earn pay premiums. Recently, Gupta et al. (2018) called findings for female CEO pay premiums into question, failing to find differences despite using data similar to prior studies. The authors investigated the discrepant findings, identifying and showing that the use of an analytical approach to account for unobserved differences (i.e. fixed effects) are inappropriate for the data structure drives’ divergent findings. The authors also find that results are affected by the industries and time-frames used in the analyses.

Findings

The authors find that female CEOs outearn their male counterparts. However, the authors also show that the significance of results is affected by the industries and time-frames used in the analyses.

Originality/value

It is an original work that reexamines a somewhat controversial issue on the gender differences in CEO pay.

Citation

Hill, A., Upadhyay, A. and Beekun, R. (2022), "Revisiting the gender gap in CEO compensation: rectifying conflictive findings by correcting Gupta, Mortal, and Guo’s (2018) misapplication of absorption in unbalanced panel", Managerial Finance, Vol. 48 No. 8, pp. 1186-1205. https://doi.org/10.1108/MF-12-2021-0587