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Article
Publication date: 10 May 2011

Nina Smith, Valdemar Smith and Mette Verne

This study aims to analyse the gender pay gap among CEOs, VPs and potential top executives. The authors seek to analyse how much of the gap is explained by differences in…

3598

Abstract

Purpose

This study aims to analyse the gender pay gap among CEOs, VPs and potential top executives. The authors seek to analyse how much of the gap is explained by differences in individual characteristics and how much is explained by firm characteristics and discriminatory processes.

Design/methodology/approach

The paper estimates compensation functions based on a panel of employer‐employee data set covering all Danish companies in the private sector with more than 50 employees during the period 1996‐2005.

Findings

The authors document that when controlling for a large number of observable characteristics and time‐invariant characteristics, there still exists a large gender compensation gap among top executives in Denmark. For VP and potential top executives, the estimated gap increased during the period 1996‐2005 while for the small and selected group of CEOs, the corrected gender gap decreased slightly.

Research limitations/implications

The study does not claim to identify causal links between top executive compensation and individual or firm specific background characteristics.

Practical implications

The extension of the family‐friendly schemes may have had negative boomerang effects on the compensation and careers of all women, irrespective of whether they become mothers or not. Especially for those women aiming to reach the top of the organisation, these effects may be important because potential career interruptions are expected to be more severe for this group.

Originality/value

This study adds to the limited empirical literature on the gender pay gap among the narrow group of top executives using a large panel employer‐employee data set of all Danish companies.

Details

International Journal of Manpower, vol. 32 no. 2
Type: Research Article
ISSN: 0143-7720

Keywords

Book part
Publication date: 11 August 2014

Kwok Leung

A defining feature of international business is the necessity for people from diverse cultural backgrounds to interact and collaborate but intercultural interaction is difficult…

Abstract

A defining feature of international business is the necessity for people from diverse cultural backgrounds to interact and collaborate but intercultural interaction is difficult and may give rise to disagreement and conflict. I have been working on the dynamics that promote positive intercultural interaction in the international business context, and two streams of my research, one empirical and the other conceptual, are reviewed here. The first stream is concerned with fairness issues surrounding the pay disparity between locals and expatriates in multinational enterprises operating in China, which has implications for MNC operations in other emerging economies. My research has shown that the pay disparity is associated with negative reactions from local employees but some management practices associated with the relationship between locals and expatriates, attributions made by locals, and salient norms about the pay disparity can buffer such negative reactions. In this research program, the focus is not on the actual interaction between locals and expatriates. To address this gap, a conceptual framework is presented, which provides insight about the factors that contribute to positive interaction between locals and expatriates. This paper ends with implications for future research on intercultural interaction in the MNC context.

Details

Multidisciplinary Insights from New AIB Fellows
Type: Book
ISBN: 978-1-78441-038-4

Keywords

Article
Publication date: 29 June 2020

Yan Tao, Gaoyan Xu and Hong Liu

This paper extends the current understanding of the retrenchment-–turnaround relationship in declined companies by introducing a compensation gap view. It argues that the…

1759

Abstract

Purpose

This paper extends the current understanding of the retrenchment-–turnaround relationship in declined companies by introducing a compensation gap view. It argues that the effectiveness of the retrenchment strategy is contingent on reducing the executive-employee compensation gap in the turnaround process.

Design/methodology/approach

Drawing from a two-stage turnaround model and insights from the literature on executive-employee compensation gap, we develop and test a theoretical model that explains how five attributes, which refer to executive-employee compensation gap, asset retrenchment, cost retrenchment, ownership and size, affect the outcome of the organizational turnaround. This paper uses the fuzzy-set qualitative comparative analysis (fsQCA) method and based on the samples of 112 listed companies that experience the decline between 2005 and 2013.

Findings

This paper concludes two valid causal paths and finds that small companies with small executive-employee compensation gap have a higher likelihood of successful turnaround when they implement cost or asset retrenchment actions. As for large state-owned companies, they should reduce the costs and maintain a small executive-employee compensation gap. An excessive compensation gap can be problematic, which could impair the organizational ability to cope with adversity and decline.

Research limitations/implications

First, this paper taps the vital role of employees in the turnaround process besides the mainstream “organizational decline-layoffs” logic, which hints a new human resource management strategy when organizations are facing decline. Second, this paper reveals the theoretical linkage between pay dispersion, internal stakeholder and organizational resilience. Third, as a methodological contribution, we introduce fsQCA, overcoming the shortcomings of turnaround strategy research with case and regression analysis and breaking through the paradigm of “specific factor-turnaround.”

Practical implications

Organizational turnaround is a systematic process that constitutes multiple factors together. When organizations take the asset retrenchment to stop bleeding, reducing the executive-employee compensation gap will help enhance employee's cognition of organizational values and strategic goals, eliminate feelings of exploitation in retrenchment implementation and thus effectively promote turnaround. This paper also provides a basis for executive compensation restrictions and re-examines pay dispersion and economic inequality.

Originality/value

This study sheds some light on the importance of the executive-employee compensation gap in retrenchment strategy and contributes to both organizational turnaround and pay dispersion theories. Also, it reveals the theoretical linkage between internal stakeholders, organizational resilience and long-term orientation.

Details

Journal of Organizational Change Management, vol. 33 no. 5
Type: Research Article
ISSN: 0953-4814

Keywords

Article
Publication date: 2 August 2013

Wen-Ting Lin and Kuei-Yang Cheng

The purpose of this paper is to examine the effects of the compensation level and the gap between the chief executive officer (CEO) and the top management team (TMT) with respect…

2369

Abstract

Purpose

The purpose of this paper is to examine the effects of the compensation level and the gap between the chief executive officer (CEO) and the top management team (TMT) with respect to the rhythm of firm internationalization.

Design/methodology/approach

The approach takes the form of an empirical analysis. The authors use longitudinal data (1997-2006) of a sample of 345 publicly-listed firms in Taiwan.

Findings

The results show that higher CEO compensation will lead to regular foreign expansion. The CEO–TMT compensation gap has a curvilinear effect on the rhythm of firm internationalization.

Research limitations/implications

These findings highlight that the compensation structure has a significant influence on a firm ' s internationalization strategy. This research contributes to the literature linking strategic human resource management and corporate strategy in terms of firm internationalization.

Practical implications

When firms consider regular foreign expansion, the compensation committee should design a high total compensation level and appropriate the compensation gap between the CEO and TMT members.

Originality/value

This study sheds light on how the compensation of the upper echelons determines whether the internationalization rhythm is regular or irregular. Moreover, the study examines how internal contingencies, such as performance, moderate the relationship between the upper echelons’ compensation and the internationalization rhythm.

Article
Publication date: 20 July 2021

Laurence Ferry, Guanming He and Chang Yang

The authors investigate how executive pay and its gap with employee pay influence the performance of Thailand tourism listed companies.

Abstract

Purpose

The authors investigate how executive pay and its gap with employee pay influence the performance of Thailand tourism listed companies.

Design/methodology/approach

The authors manually collect data on the executives' and employees' remunerations for Thailand tourism listed companies and use the data for the authors’ OLS regression analysis. To check the robustness of the results to potential endogeneity issues, the authors employ the two-stage least-squares regression analysis and the impact threshold for a confounding variable approach.

Findings

The authors find that short-term executive compensation enhances firm performance, and that long-term executive compensation reduces the likelihood of unfavorable corporate performance. The authors also find that the gap in short-term pay between executives and employees has an inverted-U relation with firm performance.

Research limitations/implications

This study suggests that higher executive pay relative to employee pay could encourage executives to work hard to improve corporate performance, but that too large a pay gap between executives and employees could impair employees' morale and harm firm performance.

Practical implications

It is important for tourism companies to not only pay executives well but also avoid too large a pay gap between executives and employees.

Social implications

This study implies the important role of compensation design in contributing to employee engagement and good performance for tourism firms.

Originality/value

This study sheds light on agency problems between executives and employees in tourism companies and provides new evidence and insights on compensation research in the tourism sector in emerging markets.

Details

Journal of Hospitality and Tourism Insights, vol. 6 no. 1
Type: Research Article
ISSN: 2514-9792

Keywords

Article
Publication date: 4 November 2013

Zhongyi Xiao, Rui He, Zhangxi Lin and Hamilton Elkins

This study investigates the determinants of Chief Executive Officer (CEO) cash compensation in relation to corporate governance and performance in China's listed firms. This…

1520

Abstract

Purpose

This study investigates the determinants of Chief Executive Officer (CEO) cash compensation in relation to corporate governance and performance in China's listed firms. This article also aims at analyzing gender earning differentials among CEOs.

Design/methodology/approach

The empirical analysis is based on the panel data set which contains information on the CEOs of 1,701 firm-year observations over the period 2006-2010. A Oaxaca decomposition is also implemented to measure the gap between male and female CEO compensation.

Findings

The paper observes that CEO compensation relies more on firm accounting performance than on stock market performance. This relationship is especially evident when accounting performance is measured as the return-on-assets. Dominant shareholders such as the state and block holders have a distinct impact on the use of incentive pay. The presence of a compensation committee in a Chinese listed firm is correlated with an excessive pay package for the Chief Executive Officer (CEO), even though there is evidence that pay-for-performance is more likely in the presence of a compensation committee. Furthermore, this context extends the international body of evidence on CEO compensation by offering a novel accounting of the gender gap in pay among China's listed firms. Examination of the dataset reveals that women represent approximately 6.8 percent of CEOs. In keeping with international norms, female CEOs are more senior and better educated than their male counterparts, yet they receive less favorable compensation. The Oaxaca decomposition shows a larger unexplained part of the pay-gap and suggests that the gender statistically explains a great deal of the gap in pay between male and female CEOs across China's listed firms.

Originality/value

This article contributes to the international corporate governance literature and implications for the design of good corporate governance for China's listed firms. Moreover, this article also highlights the current gender gap among CEOs in compensation.

Details

Nankai Business Review International, vol. 4 no. 4
Type: Research Article
ISSN: 2040-8749

Keywords

Article
Publication date: 16 August 2020

Linlin Wang, Zhaofang Chu, Wan Jiang and Yifan Xu

This study aims to build on equity theory to assess the effect of chief executive officer (CEO) underpayment on the accumulation of firm-specific knowledge, accounting for the…

Abstract

Purpose

This study aims to build on equity theory to assess the effect of chief executive officer (CEO) underpayment on the accumulation of firm-specific knowledge, accounting for the moderating effects of the CEO compensation gap and the clarity of the board’s informal hierarchy.

Design/methodology/approach

This study starts with all firms listed in the Execucomp database for the period 1992 to 2006. Then, all data sources are merged and entries with missing information are excluded. The final data set used for model estimations includes 1,152 firm-year observations. The command xtreg in Stata 12 with the fixed-effect option (fe) is used to estimate the relationship between CEO underpayment and firm-specific knowledge.

Findings

This study proposed and examined the role of CEO underpayment in discouraging CEO willingness to invest firm-specific human capital and, accordingly, to adopt a strategy of accumulating lower levels of firm-specific knowledge assets. The empirical analyses strongly support this argument. Moreover, CEO compensation gaps and the informal hierarchy of boards negatively moderated this relationship. That is, CEO underpayment had a weaker negative effect on firm-specific knowledge when the CEO compensation gap and the clarity of the board’s informal hierarchy were high.

Originality/value

Prior studies from the knowledge-based perspective have focused on the importance of firm-specific knowledge in enabling a firm to achieve superior financial performance. However, relatively little attention has been paid to CEOs’ willingness to accumulate firm-specific knowledge. The present study contributes to the knowledge-based view of the firm. This study integrates equity theory with the knowledge-based view of the firm by highlighting how unfair compensation of CEOs may discourage them to fully realize a firm’s potential to generate specific knowledge. By incorporating the fairness issue of CEO compensation into the knowledge-based view, this study contributes to a deeper understanding of the origins of firm-specific knowledge.

Details

Journal of Knowledge Management, vol. 24 no. 9
Type: Research Article
ISSN: 1367-3270

Keywords

Article
Publication date: 22 April 2004

Joanne Healy Burress and Linda J. Zucca

Although Corporate America has expended great efforts to shrink the gender equity gap at all levels, there is persistent evidence in the financial press that the gap still exists…

Abstract

Although Corporate America has expended great efforts to shrink the gender equity gap at all levels, there is persistent evidence in the financial press that the gap still exists. This study focuses on the gender equity gap in the most highly compensated positions within corporations. Using Standard & Poor’s Compustat ExecuComp database for 1992‐1997, we find that only 3 percent of the most highly compensated executives are female, that these positions are held disproportionately by men, and that female executives are more likely to be clustered in particular industry groups. In a sample matched by job title, company size and industry, male executives earn significantly higher salaries and bonuses, though total compensation is not significantly different. However, these compensation differences may be explained by differences in human capital characteristics such as age and tenure within a particular job title. Thus, the gender equity gap at top executive positions may be due more to a lack of opportunity than to wage discrimination.

Details

American Journal of Business, vol. 19 no. 1
Type: Research Article
ISSN: 1935-5181

Keywords

Article
Publication date: 16 July 2019

Benedikt Gerst and Christian Grund

Career interruptions of employees imply important issues for both firms and individuals, including a possibly lower compensation after returning to a job. Different compensation

Abstract

Purpose

Career interruptions of employees imply important issues for both firms and individuals, including a possibly lower compensation after returning to a job. Different compensation components are explored, as bonus payments frequently complement fixed salaries for many employees, making various channels of lower compensation possible. This paper aims to discuss this issue.

Design/methodology/approach

This study is based on a yearly salary survey among a rather homogeneous group of professionals and middle managers from the German chemical sector, which contains detailed information on compensation components next to individual and job characteristics. The incidence and duration of past career interruptions act as the most important independent variables. Mincer-type wage regressions are complemented by estimations on wage increases.

Findings

The results show that career interruptions are more related to lower subsequent bonus payments than they are to fixed salaries. Furthermore, interruptions caused by unemployment are associated with higher interruption pay gaps than those resulting from other reasons such as parental leave. The results even hint for catch-up effects following parental leave with regard to higher wage increases compared to individuals without interruptions. Career interruptions are more prevalent for female managers offering an explanation for a considerable part of gender pay gaps. Wage losses after career interruptions are more pronounced for male employees than they are for females, though.

Originality/value

This study extents the literature by disentangling the relation of career interruptions and different compensation components, bonus payments next to fixed salaries in particular. The role of interruption type and gender are also taken into account so that the paper deepens the understanding of the role of past career interruptions for employees’ remuneration.

Details

International Journal of Manpower, vol. 40 no. 5
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 26 April 2013

Lin Xiu

This study aims to examine the gender pay gap in organizational leadership positions in China. The author seeks to analyse how much of the gap is explained by differences in…

Abstract

Purpose

This study aims to examine the gender pay gap in organizational leadership positions in China. The author seeks to analyse how much of the gap is explained by differences in individual characteristics and how much is explained by firm characteristics.

Design/methodology/approach

This study estimates pay functions based on a unique data set from a survey of private firms and top managers in Liuzhou, Guangxi, China.

Findings

Female managers receive much lower pay than male managers in China. A larger portion of the gender earnings gap can be attributed to firm‐level characteristics than individual characteristics. Female managers tend to have fewer firm‐level characteristics that are associated with higher pay, and when they do, they tend to receive a smaller pay premium for those characteristics. This is especially the case for the firm size variable where female managers are less likely to be employed in higher paying large firms, and when they are, they receive a smaller firm‐size premium.

Research limitations/implications

This study uses a sample of small and medium‐sized enterprises (SMEs) in China. As such, the gender pay gap in larger firms or firms in large cities (e.g. Beijing or Shanghai) may not be represented by the findings of this study.

Practical implications

This study offers insights on how women executives are paid after they cross the “glass ceiling” and enter the managerial ranks in China. Female executives should be aware of the effects of firm characteristics on gender differences in compensation.

Originality/value

This study adds to the limited empirical literature on the gender pay gap among top executives using a matched establishment‐manager data set in China.

Details

Evidence-based HRM: a Global Forum for Empirical Scholarship, vol. 1 no. 1
Type: Research Article
ISSN: 2049-3983

Keywords

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