The importance of a critical mass of women on boards to reduce the gender pay disparity among non-executive directors

Abstract

Purpose The interest in promoting diversity in corporate governance is increasing gender equality on boards. Even so, previous research shows that women are underrepresented on boards of directors. This study aims to explore how an increasing presence of women on boards reduces gender pay disparity among nonexecutive directors (NEDs).

Design/methodology/approach This study explores how an increasing presence of women on boards reduces gender pay disparity among NEDs.

Findings The results indicate that for boards to reduce the gender pay disparity among NEDs, women need to reach a critical mass of 33% of board members. In addition, this study finds that women’s presence on influential committees further reduces the gender pay disparity among NEDs.

Research limitations/implications The study uses critical mass and social identity theories to explain the impact of women directors on NEDs’ remuneration in a sample of 365 companies listed on the London Stock Exchange over 16 years (1999–2015). The findings indicate the importance of reducing gender pay disparity as a tool to promote gender equality on boards.

Practical implications This study provides evidence on the importance of corporations including gender diversity on board committees to reduce gender pay disparities at the board level.

Originality/value In addition, this study finds that women’s presence on influential committees further reduces gender pay disparity among NEDs.