Women in Top Management and Job Self Selection

Abstract

Using a large sample of publicly traded firms from 1994-2002, we study the type of firms that female executives prefer to work in. We find that (1) female executives predominantly work in high risk firms and in high risk industries, (2) female CEOs have higher dismissal probability and female non-CEO executives (CFO, COO and President), in general, have lower tenure at office, and (3) there is significant self selection for female to work in high risk segments despite higher dismissal rates or lower tenure at job. Consistent with Bertrand and Hallock (2001), we find that, on average, female executives are paid lower than men, a result that is mainly driven by female in safer work segments. On the other hand, female executives in risky segments have comparable pay to their male counterparts. Using a size and industry male executive benchmark for each female executive, we also show that pay differential diminishes with the increase in job risk.