Gender of Firm Decision-Makers and Within-Firm Wage Disparity

We empirically examine the hypothesis that the gender of firm decision makers, i.e., small firm owners and large firm board directors, significantly affects within-firm wage disparity, defined as the ratio of decision makers’ to average employees’ compensation. Using unique data for both small and large firms, we find that female decision makers lower within-firm wage disparity. We identify skill/specialization level of decision makers as a key reason for this relation, based on the important role of R&D and innovation. We also identify a moderating role for proxies for business ethics, such as poor financial-reporting quality and other types of misconduct