The more the merrier? Exploring the effect of women on boards on the gender pay gap in top management teams

We examine the relationship between gender composition of boards of directors and the gender pay gap found in top management teams (TMTs), as well as the extent to which this relationship is influenced by Chief Executive Officer (CEO) gender. Using observations of 2,658 U.S. firms taken over 14 years, we find an inverted U-shaped relationship between board gender composition and the TMT pay gap, such that increasing the proportion of women on a board from zero to roughly 15 percent widens the pay gap whereby men are paid more than women. However, as the proportion of women on boards increases beyond 15 percent, the pay gap narrows and continues to do so. Moreover, the presence of a woman CEO strengthens the narrowing effect on the gender pay gap that an increased proportion of women on the board exerts. Our findings are consistent with the integrated insights we draw from queen bee, critical mass, and upper echelons theories. This paper discusses the implications of our work for research and practice.