Female CEOs in turbulent times: The effect of terrorist attacks on executive compensation

Abstract

This study investigates how terrorist attacks affect female CEO compensation. Using terrorist attacks, as exogenous events, in the United States from 1992 to 2021, we find that firms located near terrorist attacks subsequently provide higher compensation to female CEOs than their male counterparts. This effect is more pronounced for female CEOs who serve as board chairs. Additionally, firms led by female CEOs experience lower stock volatility and earnings volatility. Overall, our findings suggest that given the heightened uncertainty firms face following the attacks, they have incentives to offer higher compensation to retain female executives, thereby ensuring leadership continuity and benefiting from female leadership during a crisis period.