One Size Doesn't Fit All: Gender Differences in the CEO Compensation-Firm Risk-Taking Relationship
Significant research has addressed how CEO compensation relates to firm risk taking. However, given the CEO position has been predominantly male-held in the past, we have little understanding whether the same compensation practices shown as effective for male CEOs generalize to female CEOs. We theorize female CEOs will respond differently to compensation than male CEOs. Specifically, we argue that female CEOs will be less likely to pursue risky firm decisions than male CEOs with higher levels of stock options, but more likely than male CEOs to pursue risky firm decisions with higher levels of cash- based pay and guaranteed severance pay. Using S&P 500 and MidCap CEOs from 2007 to 2015, we find strong support for our arguments.