Female Directors and Salary Excess: A Comparative Study for Spain and UK


  • María Encarnación Lucas-Pérez University of Murcia
  • Brian G.M. Main University of Edinburgh
  • Antonio Mínguez-Vera University of Murcia
  • Gregorio Sánchez-Marín University of Alcala


Current literature shows great interest in the effects of gender diversity on boards of directors. Most studies analyse a direct relationship between diversity and the value of the firm, without studying the intermediate mechanisms that may influence such a relationship. This study, through the use of panel data methodology, presents evidence of the influence of gender diversity on excess executive compensation comparing a set of listed UK and Spanish firms on an 8-year panel data. Several specific contributions are produced by this research. First, because of scarcity of literature of this type, this study contributes to a deeper understanding of the relationship between gender diversity, board effectiveness, and top managers’ compensation. Second, to our knowledge, this is the first empirical study to compare in depth the corporate governance between the United Kingdom and Spain and their respective effects in Excess executive compensation. Both countries exhibit key differences regarding both the role of the governance contexts and the firms' mechanisms of monitoring that influence the design of executive compensation. The results show a negative and highly significant effect of the percentage of female executive directors on excess executive compensation for both countries. The results also show that women executive directors cause a moderating effect in the relation between board size, the separation of the charges of CEO and president of the board, the percentage of independent directors, the institutional ownership and excess executive compensation. Therefore, the implications of this study go in the direction of the reform of the composition of boards, which might lead to a recovery of confidence in businesses after the recent financial scandals, and the introduction of gender diversity could be the first step towards the improved control and effectiveness of companies. In this way, firms should not only take into account that gender diversity helps to make them socially responsible, with a view to complying with equality legislation and to improving their corporate image, but that increasing diversity on boards can also help them take better corporate decisions.