Gender and Dynamic Agency: Theory and Evidence on the Compensation of Top Executives

Albanesi, Stefania; Olivetti, Claudia; Prados, María José

doi:10.2139/ssrn.2577580

Cited by 10 publications

(1 citation statement)

References 42 publications

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“…The separation between ownership and control may allow managers substantial latitude in determining both their own contracts and those of their employees. Bertrand and Mullanaithan () and Albanesi and Olivetti () present evidence that CEOs “skim” rents from firms, especially in favorable conditions in which they are less likely to be detected. Indeed, linking these skimmed rents with “performance” may be crucial in reducing their likelihood of detection as it is often difficult to accurately determine the influence of the CEO on performance.…”

Section: Motivation and Theoretical Backgroundmentioning

confidence: 99%

Don't Forget the Gravy! Are Bonuses Just Added on Top of Salaries?

Green

Heywood

2016

Industrial Relations

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The press often depicts bonuses as extra payments to the already well compensated and calls for reform. Yet, these calls typically ignore the efficiency argument that bonuses are potentially risky performance pay that substitute for salary compensation. This paper uses representative UK data to estimate that bonuses appear not to substitute for salary in cross-sectional estimates. Yet, when controlling for time-invariant characteristics in panel data, bonuses emerge as partial substitutes. Each pound of bonus comes at a cost of 40 pence in other earnings. The degree of substitution is far larger at the bottom of the earnings distribution and far smaller at the top of the earnings distribution where, indeed, bonuses look more like gravy. IntroductionThe payment of bonuses as part of managerial and executive compensation attracts continued public controversy. The media highlight the size of bonuses paid at financial institutions, often with the application of pejorative terms such as "bonus culture" that suggest the payment of something for nothing. 1 Indeed, the depth of public feeling regarding bonuses has led to pronouncements by both the U.S. president and the UK prime minister on the need to restrain these "inequitable payments" and proposed legislation to cap bank bonuses in the EU. The public perception of something for nothing seems at odds with the basic theory that bonuses, like other forms of performance pay, represent a *The authors' affiliations are, respectively, Lancaster University, Lancaster, United Kingdom. 490 means to mitigate agency problems in labor contracts. Payment contingent on worker performance stands in lieu of some portion of an otherwise riskless (or at least less risky) salary payment and serves to increase firm profitability, worker utility, or both. In fact, the presumption that high performance bonuses substitute for salaries provides the basis for the resistance by both the UK and U.S. financial sector to cap or reduce bonus payments. Advocates for the sector explicitly claim that reducing bonuses will lead to either a necessary compensating increase in salary payments or a loss of talent within the sector.The basic notion that performance pay elicits additional effort and is associated with increased earnings stands as well engrained in the economics of personnel (Brown 1992;Lazear 2000;Parent 1999;Shearer 2004). Yet, the combination of the disutility from greater effort and risk has left in doubt the extent to which the higher pay generates higher worker utility from performance pay (Cornelissen, Heywood, and Jirjahn 2011; Green and Heywood 2008). At least part of the answer of whether or not workers benefit from performance pay revolves around the critical issue at the heart of the public debate, the extent to which performance pay substitutes for fixed-time rates. As we will detail, previous empirical results often fail to find any substitution showing that higher performance payments tend to be associated with higher fixed-time rates. If correct, the performance pay in these...

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Section: Motivation and Theoretical Backgroundmentioning

confidence: 99%

Don't Forget the Gravy! Are Bonuses Just Added on Top of Salaries?

Green

Heywood

2016

Industrial Relations

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Shifting perspectives: How scrutiny shapes the relationship between CEO gender and acquisition activity

Gamache

Devers

Klein

et al. 2023

Strategic Management Journal

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Research SummarySeveral upper echelons studies have found that firms led by female executives are less likely to engage in risky endeavors than those led by male top executives. We argue that conceptualizing female CEOs as universally conservative decision‐makers may paint too simplistic a picture and that the impact of CEO gender on strategic decision‐making may vary significantly depending on the given situation CEOs are experiencing. We integrate executive job demands and gender research to propose that scrutiny will exhibit differential effects on female and male CEOs' acquisition activity. We show that in high‐scrutiny contexts, the difference between male and female CEO acquisition activity disappears. In contrast, in low‐scrutiny contexts, the difference between male and female CEOs' acquisition activity is exaggerated.Managerial SummarySubstantial research has shown that female executives acquire at a lower rate than male executives. We argue that viewing female CEOs as universally conservative decision‐makers may paint too simplistic a picture and that the impact of CEO gender on strategic decision‐making may vary significantly depending on the given situation CEOs are experiencing. In particular, we argue and find that in high‐scrutiny contexts, the difference between male and female CEO acquisition activity disappears. This research suggests that managers should consider the impact of environmental context—especially the role of scrutiny—when considering the risk propensity of female leaders.

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Gender Inequality in Economic Resources

Kulich

Chipeaux

2019

The Social Psychology of Inequality

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Women's lower economic power is one of the symptoms of a hierarchical organization of societies. Creating economic gender equality needs to be a core interest of policies and research as it is a key to better well-being for other social groups and has advantages for society at large. This chapter first presents current trends in the understanding of unequal distribution of economic resources and specifically the gender pay gap based on several structural and psychological factors. It then takes a different angle on these individual differences approaches and analyzes the contributions and moderating forces in the social context which reinforce or inhibit both structural and psychological reasons for economic inequalities. Social psychological findings help to understand how stereotypes and social norms affect bias in pay allocators, the differential valuation of job content when stereotyped as feminine or masculine, and the gender variance in pay receivers' preferences and behaviors. In the concluding remarks three contextual keys for efficient interventions are advanced aiming at changing the social reality and thereby attenuating gender bias of individuals: The increase of female representation in positions of power, combined with diversity friendly societal and organizational climates, and transparency of the distribution of economic power.

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Gender and Dynamic Agency: Theory and Evidence on the Compensation of Top Executives

Cited by 10 publications

References 42 publications

Don't Forget the Gravy! Are Bonuses Just Added on Top of Salaries?

Don't Forget the Gravy! Are Bonuses Just Added on Top of Salaries?

Shifting perspectives: How scrutiny shapes the relationship between CEO gender and acquisition activity

Gender Inequality in Economic Resources

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