Beneficial impact of women chairing remuneration committees

When a woman chair a company’s remuneration committee – which is responsible for setting the salaries of senior executives – the company scores more highly on its corporate governance, according to new research

Claudine Pereira Salgado of Heriot-Watt University, analysed data from 163 UK companies in the FTSE 350 index from 2011 to 2021.

She found that, keeping all other variables constant, a company with a female-chaired remuneration committee will have a higher corporate governance index than when a man chairs the remuneration committee.

A higher corporate governance scores means that a company behaves more responsibly in its setting of senior executives’ pay, its shareholders’ rights and other areas.

Pereira Salgado writes: “The regression models show a positive and significant association between female chairs in the remuneration committee and corporate governance score. It implies that considering the sample of this study, when a woman is chairing the remuneration committee, the score of corporate governance is higher in such companies. It can also imply that women chairing such committees positively affect corporate governance by improving corporate governance practices in such companies. This study’s significant result highlights the effects women occupying influential positions in the central corporate bodies can bring to the companies.”

The research is being presented today at the British Academy of Management’s 38th annual conference, from September 2 to September 6 2024 at the Nottingham Business School, Nottingham Trent University.

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