Politics and gender in the executive suite

Abstract

Recent years have seen increased interest in gender diversity within corporate America. CEOs’ political preferences have been shown to influence many corporate decisions. Evidence suggests that views on gender equality align more with political preferences than an individual’s gender. We investigate if CEOs’ political leanings correlate with female representation and compensation in the executive suite. We discover that Democratic CEOs (those donating more to Democratic candidates) correlate with greater female presence in the executive suite. Using an event-study method, we find replacing a Republican with a Democratic CEO leads to a 20%–50% rise in executive suite female representation. Additionally, Democratic CEOs significantly reduce, or eliminate, the gender pay gap in executive compensation levels and performance sensitivity.