Women on boards, ownership structure, and CEO compensation: evidence from an emerging economy

Purpose: This study aims to investigate the association between the presence of women on boards and chief executive officer (CEO) compensation, and to examine how institutional and foreign ownership moderate this relationship within the context of an emerging economy. 
Design/methodology/approach: The analysis focuses on the financial sector, encompassing both banks and non-bank financial institutions, over the period from 2013 to 2022. Ordinary least squares (OLS) regression models are employed to assess the associations. 
Findings: The results indicate that firms with a higher proportion of women directors on their boards tend to have higher CEO compensation. However, this positive relationship is negatively moderated by institutional and foreign ownership. The findings remain robust after addressing potential endogeneity concerns, including observable heterogeneity bias and reverse causality, and alternative measures of female board presence and CEO remuneration. Furthermore, the positive association diminishes when the number of women directors reaches a critical mass, and the moderating effect of institutional ownership is stronger when three or more women are on the board. 
Research limitations/implications: Since the study data are from Bangladesh’s financial sector, the findings may not be generalisable to other industries or national contexts. 
Practical implications: The study provides insights for regulators, policymakers, and stakeholders, highlighting the importance of promoting gender diversity in boardrooms and recognising the moderating impacts of institutional and foreign ownership in strengthening board governance. 
Originality/value: This study adds to the growing literature on board gender diversity in developing economies and the joint effect of women directors and institutional/foreign ownership on board oversight effectiveness.