Women in leadership: an analysis of the gender pay gap in ASX‐listed firms

Summary

The research paper "Women in leadership: an analysis of the gender pay gap in ASX‐listed firms" by Hutchinson, Mack, and Verhoeven (2017) investigates the existence and nature of the gender pay gap among senior executives in companies listed on the Australian Securities Exchange (ASX) between 2002 and 2013. The study's methodology involved a comprehensive examination of executive compensation, controlling for a wide array of personal, occupational, and firm-specific observable characteristics. To ensure the robustness of their findings, the authors employed several econometric techniques, including firm fixed effects and propensity-score matching. Furthermore, a Blinder–Oaxaca decomposition was utilized to dissect the pay gap, helping to distinguish between the portion attributable to differences in observed characteristics and the unexplained residual. The findings of the study reveal a persistent and largely unexplained gender pay gap among senior executives in corporate Australia. Specifically, after accounting for numerous control variables, female senior executives were found to receive, on average, 22.58 percent less in base salary compared to their male counterparts during the analyzed period. The disparity extends to performance-based remuneration, with females receiving approximately 16.47 percent less in cash bonuses and 18.21 percent less in long-term incentives. Crucially, the Blinder–Oaxaca decomposition indicated that this significant mean pay gap could not be attributed to gender differences in observable attributes, such as job titles or other personal and occupational factors. Instead, the results suggest that the gap is linked to differences in returns on firm-specific variables, particularly firm risk. This implies that women in leadership positions may be systematically compensated less for similar roles and contributions, pointing to deeper structural issues within corporate remuneration practices. The implications highlight that despite decades of efforts toward equal pay, an inherent bias persists, challenging the notion of meritocracy in senior leadership compensation.