This study aims to determine the extent to which existing general theories and explanations for the gap are applicable to the specific and homogenous group of top executives and chairpersons. Key explanations for the gender pay gap are theorized to be company size, the executive’s position within the board and industry line.
Additionally, existing labor market theories suggest that the size of the discriminated group has an impact on the amount of discrimination, so that the number of females has an impact on the gender pay gap.
A linear regression was conducted to validate the explanations. Moreover, the effect of the minority group’s size was analyzed within another set of regressions, using as moderators the proportion of female board members and the proportion of male workers within the industry. The hypothesis states that an increase in the size of the minority group causes a decrease in the effect of gender on earnings.
The dataset was provided by Kienbaum Consultants International GmbH and included information on the base, variable and total compensation of 1,080 board members (N = 1,080) among DAX- and MDAX-listed companies in the years 2014-16.
The results show significant effects of gender on earnings, even after taking into account the board members’ position, the industry line and the size of the company.
Both company size and position show a positive significant coefficient for the earnings regression, while industry does not show a significant effect.
For the moderator analyses, neither the proportion of females on the board nor the proportion of females within the industry had a significant widening or shrinking effect on the gender pay gap. This leads to the assumption that neither one influence the gender pay gap.
However, I found major inequalities of the gender pay gap in base and variable compensations. In a post-hoc analysis I tested significant differences in mean target compensation and mean payout level. The results show no significant differences in target compensation, yet in payout level, which suggests that further research on the topic of performance management is needed.
Table of Contents
1 INTRODUCTION
2 THEORETICAL FRAMEWORK
2.1 THE GENDER PAY GAP AND STATE OF THE ART
2.2 EXPLANATORY FACTORS FOR THE GENDER PAY GAP
2.3 MODERATING EFFECTS OF THE MINORITY GROUP’S SIZE
3 METHODOLOGY
3.1 PROCEDURE
3.2 SAMPLE
3.3 MEASURES
3.4 METHOD OF ANALYSIS
4 RESULTS
4.1 DESCRIPTIVE STATISTICS
4.2 DISCUSSION OF HYPOTHESES
4.2.1 The gender pay gap
4.2.2. Analysis of explanatory factors
4.2.3 Moderating effect of male proportion within the sector
4.2.4 Moderating effect of gender diversion on the board
4.2.5 Post-hoc analysis
5 DISCUSSION AND CONCLUSION
5.1 INTERPRETATION OF RESULTS
5.2 DISCUSSION AND RECOMMENDATIONS FOR FUTURE RESEARCH
5.3 STRENGTHS AND LIMITATIONS
5.4 CONCLUSION
Research Objectives and Themes
This thesis examines the existence and extent of the gender pay gap among top executives and chairpersons in German DAX- and MDAX-listed companies. The central research question investigates whether general theories regarding wage disparities—such as company size, position, and industry—apply to this homogeneous group, while additionally testing if the size of the female minority group moderates the gender pay gap.
- Analysis of the gender pay gap in top management
- Evaluation of explanatory factors (firm size, industry, hierarchical position)
- Impact of minority group size on labor market discrimination
- Investigation of differences between base and variable compensation
- Analysis of payout levels for female vs. male board members
Excerpt from the Book
2.1 The gender pay gap and state of the art
In this part of the thesis, I offer a general explanation of the gender pay gap and define its two different forms. Subsequently, the state of the art is described, both in Germany and globally.
The gender pay gap is generally described as the average difference between a man and a woman’s remuneration (Gabler Wirtschaftslexikon). The gap can be referred to in two different contexts: First, the so-called unadjusted (simple or average) pay gap provides the percentage differential of the average gross hourly compensation of female and male employers (aged 16-64 years, minimum working time 15 hours per week). This gap does not take any explanation into account and therefore does not refer to the concept of “equal pay for work of equal value,” but rather to the wider concept of women’s underrepresentation in high-paid jobs, industries and so forth (Gabler Wirtschaftslexikon).
Second, the adjusted pay gap controls for a variety of worker characteristics, such as human capital, work experience, age, tenure and education. The adjusted pay gap is considered to refer to labor market discrimination against women and therefore it is widely accepted that it should be minimized (Grimshaw & Rubery, 2002). The differential can be measured in a variety of ways, for instance referring to monthly, yearly or overall income and gross or net income, and the analyses can be limited to a specific group. In most cases, gross hourly wages are considered (Bundesministerium für Familie, Senioren, Frauen und Jugend, 2017).
Summary of Chapters
1 INTRODUCTION: Sets the stage by discussing the relevance of the gender pay gap in Germany and the rationale for focusing on top-management teams.
2 THEORETICAL FRAMEWORK: Defines the gender pay gap and reviews theories such as the human capital model, occupational segregation, and discrimination.
3 METHODOLOGY: Describes the Kienbaum dataset covering board member compensation in DAX and MDAX companies from 2014–2016 and the statistical regression approach.
4 RESULTS: Presents findings on descriptive statistics, the gender pay gap significance, and testing of moderation hypotheses regarding minority group size.
5 DISCUSSION AND CONCLUSION: Interprets the findings, offers a post-hoc analysis regarding variable compensation, and discusses limitations and future research needs.
Keywords
Gender pay gap, Top executives, German boards, Compensation, Human capital, Labor market discrimination, Diversity, Minority group, Variable compensation, Vertical segregation, Horizontal segregation, Payout level, Corporate governance, Gender equality, DAX/MDAX
Frequently Asked Questions
What is the core subject of the thesis?
The thesis focuses on analyzing the gender pay gap specifically among high-level executive board members in German companies listed in the DAX and MDAX indices between 2014 and 2016.
What are the primary fields of study involved?
The main thematic fields include labor economics, corporate governance, compensation management, and gender studies regarding occupational segregation and discrimination.
What is the main objective of the research?
The goal is to determine if traditional economic explanations for the gender pay gap (like firm size and position) hold true for top-level executives and whether the proportion of women (minority group size) influences the compensation gap.
What methodology was used for the analysis?
The author utilized linear regressions and t-tests on a dataset from Kienbaum Consultants International, consisting of 1,080 observations of board members to validate hypotheses.
What does the main body address?
The main part of the work provides a theoretical foundation, defines the empirical methodology, details the results of regressions on base and variable compensation, and conducts a post-hoc analysis.
Which keywords best characterize the work?
Key terms include Gender pay gap, Board compensation, Top management, Minority group, and Pay equity.
What were the findings regarding base compensation?
The study found no significant correlation between gender and base compensation, suggesting that salary gaps are more prominent in performance-based components.
Why is the variable compensation aspect significant?
The post-hoc analysis reveals that while negotiated target salaries for female and male executives are similar, the actual payout levels of variable compensation differ significantly, suggesting discrepancies in performance evaluation.
- Quote paper
- Ann-Kathrin Wolters-Schoon (Author), 2018, The Gender Pay Gap in German Executive Boards, Munich, GRIN Verlag, https://www.grin.com/document/1514693
