Standing shoulder-to-shoulder: Female solidarity and CEO–employee pay gap

Abstract

Drawing on an international sample of 20,576 observations between 2002 and 2021, we find that greater female employment is positively associated with a higher salary gap, implying that firms employing more women are more prone to a higher salary gap. However, a greater proportion of female executives and directors per se are not associated with the salary gap. Considering the outputs of interaction effects, the solidarity of female executives with female employees, female directors with female employees, and female directors with female executives diminishes the firm’s salary gap. Besides, smaller firms having more female employees are more afflicted by the salary gap than larger firms, and female solidarity is less functional in smaller firms. Lastly, firms domiciled in high-Worldwide Governance Indicator (WGI) countries with more female employees are more beset by salary gaps than those in low-WGI countries. Although female solidarity is functional in both institutional environments, it is stronger in high-WGI countries.