Fair compensation for women in leadership: impact on firm performance

PurposeThis paper aims to investigate the impact of gender equality in boardrooms, managerial positions and executive roles on firm financial performance. It specifically examines the moderating effect of fair remuneration on this relationship.Design/methodology/approachThis study uses ESG metrics from CSRHub and data from Bloomberg to analyze 279 Malaysian public listed companies from 2013 to 2022. It uses regression analysis to assess how gender diversity - represented by women on boards, in managerial and executive positions - affects firm performance. The analysis includes fair remuneration to evaluate its moderating effects on the gender diversity-firm performance relationship.FindingsThe results indicate that greater female representation on boards and in managerial and executive positions significantly boosts firm performance. Additionally, the findings confirm that fair remuneration moderates the relationship between gender diversity and firm performance, although it introduces unintended effects that slightly reduce the overall benefits of increased female representation. This highlights the need for a strategic approach to integrate gender diversity initiatives with compensation policies to ensure they work together effectively for optimal outcomes.Originality/valueThis study broadens the literature by examining female representation not only on corporate boards but also in managerial and executive positions. The authors propose a new model promoting gender balance and fair remuneration, designed to boost the recruitment of female employees and advance workplace gender equality, offering a vital framework for organizations seeking to merge financial performance with social objectives.