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Political connections and remuneration of bank boards’ members: moderating effect of gender diversity

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  • Catarina Proença

    (University of Coimbra, CeBER)

  • Mário Augusto

    (University of Coimbra, CeBER)

  • José Murteira

    (University of Coimbra, CeBER)

Abstract

This study investigates the impact of political connections of members of banks’ Boards of Directors on these boards’ remuneration, and the influence of gender diversity on this impact. Using a panel of observations on 69 eurozone banks supervised by the ECB for the period 2011 to 2019, and the generalized method of moments (GMM), our empirical results indicate that political connections negatively impact average remuneration. In our view, directors with political connections prefer other types of benefits, aiming at future political positions and not wanting to be associated with high remunerations. Meanwhile, gender diversity accentuates this negative effect, a finding that may be related to the fact that, by including female directors, shareholders try to reduce the level of opportunistic behavior associated with political connections. Overall, we find that our results are robust across different choices of measures of gender diversity.

Suggested Citation

  • Catarina Proença & Mário Augusto & José Murteira, 2023. "Political connections and remuneration of bank boards’ members: moderating effect of gender diversity," Review of Managerial Science, Springer, vol. 17(8), pages 2727-2767, November.
    • Handle: RePEc:spr:rvmgts:v:17:y:2023:i:8:d:10.1007_s11846-022-00599-5
    DOI: 10.1007/s11846-022-00599-5
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    More about this item

    Keywords

    Political connections; Gender diversity; Remuneration; ECB; GMM;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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