The governing role of board gender diversity on conditional accounting conservatism and executive remuneration: performance-based versus equity-based remunerations

Abstract

AbstractThis study examines the governing role of gender diversity on the board of directors on conditional accounting conservatism and executive remuneration. Using proprietary data about women representation on the board of directors to investigate the impact on the choice between accounting methods and the structure of executives remuneration. A sample of listed firms on the London Stock Exchange from 2019 to 2022 is used. The results first document that firms exhibit a higher level of conditional accounting conservatism when women represent a larger fraction of the board. The analyses further establish different relationships between performance-based versus equity-based remunerations and conditional accounting conservatism. Last, the results show that women representation is related to pay out policy and its impact on conditional accounting conservatism. The findings also offer novel insights on the governing role and consequences of gender diversity of woman chairperson and/or woman CEO. Overall, contrary to notions of opportunistic behavior of executives, the results find that boards achieve more level of governance with more women representation.