Female board directorships, the CEO–employee pay ratio, and firm performance
Female board directorships, the CEO–employee pay ratio, and firm performance
Based on the premises of the social role theory, we investigate whether board gender composition may influence firm-level pay inequality by improving the ability of boards to oversee managers and counter their influence on the compensation-setting process. Using the data of Chinese listed firms over the period 2007–2022, we investigate the relationship between female board directorships, the CEO–employee pay ratio (pay inequality) and firm performance. Consistent with social role theory, we find that firms with women directors on their boards have higher CEO–employee pay ratios, which have a positive impact on firm performance. We find these results to be robust by using different measures of female board directorships, alternative sample compositions and alternative estimation methods and by addressing any potential endogeneity concerns. Overall, our findings support that women directors are effective in deciding the level of pay inequality that is linked to improved firm performance.
CEO–employee pay ratio, board gender diversity, firm performance, pay inequality
Usman, Muhammad
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Khan, Muhammad
415ec6cc-5b0d-423c-9cd8-b8d0c381b4f4
Gull, Ammar Ali
dc69392a-4b32-4945-b298-29c6fa06d89c
Mushtaq, Rizwan
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Zalata, Alaa Mansour
0fc2c56d-97ad-44ce-ab31-63ca335dcef6
Usman, Muhammad
a09e6ced-b5aa-464b-b87b-923ffdf36b7d
Khan, Muhammad
415ec6cc-5b0d-423c-9cd8-b8d0c381b4f4
Gull, Ammar Ali
dc69392a-4b32-4945-b298-29c6fa06d89c
Mushtaq, Rizwan
34a27406-579a-4c43-9482-14c577d90c73
Zalata, Alaa Mansour
0fc2c56d-97ad-44ce-ab31-63ca335dcef6
Usman, Muhammad, Khan, Muhammad, Gull, Ammar Ali, Mushtaq, Rizwan and Zalata, Alaa Mansour
(2026)
Female board directorships, the CEO–employee pay ratio, and firm performance.
International Journal of Finance & Economics.
(doi:10.1002/ijfe.70133).
Abstract
Based on the premises of the social role theory, we investigate whether board gender composition may influence firm-level pay inequality by improving the ability of boards to oversee managers and counter their influence on the compensation-setting process. Using the data of Chinese listed firms over the period 2007–2022, we investigate the relationship between female board directorships, the CEO–employee pay ratio (pay inequality) and firm performance. Consistent with social role theory, we find that firms with women directors on their boards have higher CEO–employee pay ratios, which have a positive impact on firm performance. We find these results to be robust by using different measures of female board directorships, alternative sample compositions and alternative estimation methods and by addressing any potential endogeneity concerns. Overall, our findings support that women directors are effective in deciding the level of pay inequality that is linked to improved firm performance.
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Accepted/In Press date: 16 December 2025
e-pub ahead of print date: 7 January 2026
Keywords:
CEO–employee pay ratio, board gender diversity, firm performance, pay inequality
Identifiers
Local EPrints ID: 509438
URI: http://eprints.soton.ac.uk/id/eprint/509438
ISSN: 1076-9307
PURE UUID: 75b85ff9-9571-4383-98cb-34029968b7ed
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Date deposited: 23 Feb 2026 17:41
Last modified: 24 Feb 2026 02:50
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Contributors
Author:
Muhammad Usman
Author:
Muhammad Khan
Author:
Ammar Ali Gull
Author:
Rizwan Mushtaq
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