Abstract:
This dissertation comprises four single papers revolving around corporate boards in European firms and different aspects of these firms’ sustainability performance. While chapters 2 and 3 focus on non-executive directors and firms’ environmental and social outcomes, chapters 4 and 5 concentrate on inefficient compensation practices for executive directors as potential repercussions of failing internal governance mechanisms. In particular, chapter 2 uses the introduction of gender balancing reforms across European countries to estimate the (side) effects of board gender diversity on firms’ environmental and social performance and how these differ contingent on firm size. This paper contributes to the literature by using a staggered differences-in-differences approach allowing for a more causal inference, and by shedding light on the contingencies under which gender-diverse boards are particularly beneficial for sustainable outcomes. Chapter 3 looks at the relation between board diversity as a combined measure of directors’ age, gender and nationality, and firms’ social and environmental performance. It further assesses the moderating role of board size on this link. It addresses the so far scarce literature on the relationship between boards and non-financial outcomes, while also ascribing board size a more meaningful role than being a mere control variable. Chapter 4 adds to the research on the gender pay gap by providing evidence that, firstly, executive positions perceived as more “feminine” pay less and that, secondly, female executives face a Catch 22 situation. That is, women more often hold “feminine” executive positions that generally pay less, or they experience a pay backlash for holding a gender role-incongruent “masculine” position – both scenarios thus contributing to the gender pay gap, rooting in inefficient pay setting as a failing governance mechanism. Chapter 5 analyzes how executives’ perceived dominance based on their facial width-to-height ratio interferes with the pay-performance-sensitivity, which again highlights shortcomings of the pay setting process. Its novelty lies in proposing the more psychological “soft” factor of perceived dominance – as compared to “hard” factors such as experience – as a new outlook on managerial power.
