Does information about gender pay matter to investors? An experimental investigation

• In Event: Gender and Ethnicity Effects

Abstract

A commonly cited statistic is that “women earn 79 cents for every dollar men earn” (CNN, 2016). In an effort to reduce or eliminate the gender pay gap, activists and investors have called for companies to disclose gender pay information. Although a small but growing list of companies voluntarily disclose this gender pay information (The Washington Post 2016), most other companies appear reluctant. This study investigates whether and how investors react to the disclosure of gender pay information. Using an experimental design, we find that investors rate a firm as a more attractive investment and are more willing to invest in a company that discloses gender pay information when this disclosure indicates female and male employees are paid equally. Further, investors view the compensation policies of a company disclosing a gender pay gap (regardless of which gender is paid more) as more unfair than a company that discloses no information about gender pay. These findings have implications for regulators, managers, investors, and other interested parties by providing insight into how investors might react to a required or voluntary disclosure of gender pay information.

Authors

• Chelsea Rae Austin, University of South Carolina

• Donna Bobek Schmitt, University of South Carolina

• Ling Lin Harris, University of South Carolina