| Pub. Date | : October, 2021 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP081021 |
| Author Name | : Pavana Jyothi*, P Bhanu Sireesha** and Hussain Yaganti*** |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 10 |
In this study, we examine the impact of CEO gender on the compensation of Indian corporate employees. Based on the theoretical and empirical research in business ethics and leadership styles, which argue that females are 'care' and 'relationship' oriented, we hypothesize a positive impact on compensation. Our results show that the average compensation increased by about 14% when females took over the leadership and they pay a significantly higher compensation as compared to the industry averages. This increase is observed irrespective of the size, performance and growth of firms. However, the positive impact is weaker for highly levered firms.
There are several studies in economic literature, which argue that management styles, a behavioral aspect, influence firm level policies, including wage/compensation policy (Bertrand and Schoar, 2003). These behavioral researchers argue that employee wages are affected by the race, gender and cultural aspects (Tate and Yang, 2015). Taking a cue from Becker's (2010) theoretical foundation on the taste for discrimination, various researchers have studied the impact of these behavioral aspects, especially the gender of the leader, on the wage policy of corporate firms (Cardoso and Winter-Ebmer, 2010; and Abendroth et al., 2017). Generally, this stream of research addresses two important questions. First, what is the impact of female leadership on the wage gap between male and female employees. And second, the impact of female leadership on the distribution of wage gap across different levels of jobs (Grund, 2015). The general conclusion of this stream of literature is that female leadership has a negative impact on the wage gap and the impact varies across different levels of job. The maximum reduction is seen at the top level of the organization, while the minimum reduction is seen at the bottom level of the organization (Cardoso and Winter-Ebmer, 2010; Tate and Yang, 2015; and Abendroth et al., 2017). However, there is no