Racial Diversity and Inclusion Without Equity? Evidence from Executive Compensation
Speaker(s)
Discussant(s)
Authors
Felipe Cabezon, Eliezer M. Fich, Lubomir P. Litov
Abstract
We find that the compensation structure of top managers (except CEOs) varies according to ethnicity/race. On average, Blacks, Hispanics, Asians, and Native Americans receive less equity-based pay than White executives in the same firm. Companies headquartered in high racism areas have more dissimilar pay structures. As the pay structure similarity decreases, the pay gap between White and ethnic-minority executives increases. Firms with more similar racial pay structures in their C-suite, exhibit higher stock market valuations, better operating performance, less financial fraud, and lower CEO-to-median-worker pay ratios. Racial pay structures are more similar in C-suites led by an ethnic-minority CEO.