Abstract
We examine whether sex discrimination contributes to the underrepresentation of female executives in large corporations. China’s strong cultural preference for sons has made newborn boys greatly outnumber newborn girls. Using the male-to-female sex ratio at birth as the proxy for discrimination against women, we find that firms headquartered in more discriminatory areas hire fewer female executives. Even conditional on a woman reaching an executive position, she faces a higher likelihood of dismissal and receives lower compensation than her male counterparts. Overall, our findings suggest that sex discrimination plays an important role in preventing women from climbing the corporate ladder.
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Notes
Bureau of Labor Statistics 2012 Current Population Survey, and 2012 Catalyst Census: Fortune 500 Women Executives Officers and Top Earners.
Instead of examining the wage difference between males and females, Kuhn and Shen (2013) study explicit gender discrimination in a population of advertisements on a Chinese Internet job board and find that gender-targeted job advertisements are common.
The Chinese National Statistics Bureau usually conducts the population censure surveys every 5 years, and thus, there are three surveys in the 2000–2010 period. We use the province-level data on sex ratio at birth mainly because the finest granularity of this information is at the province level.
Sex ratio at birth shows few changes over time. For example, the correlation coefficient between sex ratio at birth in 2000 and sex ratio at birth in 2010 is 0.75. This fact is consistent with our argument that sex ratio at birth reflects parents’ preference for sons, which changes very slowly over time. In an untabulated sensitivity test, we employ the sex ratio data from the closest year instead of the closest prior year, and our inference is unchanged.
Chinese Yuan is converted to U.S. dollars based on an exchange rate of one U.S. dollar to seven Chinese Yuan.
Assuming that the global benchmark of sex ratio at birth is 1.05, a t test of the null of the sex ratio at birth being 1.05 is rejected at the 1 % level.
The fact of lower sex ratio in these three provinces is largely consistent with the existing literature that China’s sex discrimination is less severe in less developed areas and in the areas with smaller Han ethnic population. For example, Attané (2009) finds that, in China, the provinces with greater economic and social modernization tend to have more severe gender discrimination. Attané (2009, p. 98) states that “…far form reducing discrimination against daughters, modernization actually tends to increase it.” Moreover, Ningxia, Xinjiang, and Tibet are dominated by non-Han ethnic population. Compared to the Han ethnic group, non-Han ethnic groups are less prone to practice gender discrimination (Banister 2004).
Although son preference is the fundamental driving force for the imbalanced sex ratio at birth, the regional variation in sex ratio at birth may also be partially driven by the enforcement of the one-child policy and the availability of sex-selective abortion technology (i.e., Ultrasound B) in different provinces. To the extent that an individual firm’s choice of having female executives has little to do with the one-child policy or Ultrasound B technology, this possibility works against us finding any significant results between sex ratio at birth and female representation in the top management team.
Moreover, as reported in Panel B of Table 1, sex ratio at birth is negatively correlated with sex ratio in the labor force, which further mitigates the concern that our results are driven by the fact that there are more men than women in the labor force in the provinces with high sex ratio at birth.
Among these firms, 46 relocated their headquarters to Beijing, Shanghai, and Guangdong. This seems to suggest that the motivation for firms’ relocation decision is to get closer to the financial or political center. Nevertheless, we find no evidence that firms hire more (fewer) female top managers after relocating to provinces with less (more) discrimination, possibly because the size of this relocating sample is too small and/or it takes time for a firm to change its top management team.
A counterargument can be that conditional on reaching top management positions, female managers are more capable and thus paid more.
Chinese public firms started to report executive compensation information from 2005. Thus, the sample period in Table 7 is from 2005 to 2011.
Chongqing became a municipality in 1997. Prior to that, Chongqing is part of Sichuan Province and there is no sex ratio data available for Chongqing in 1990. Therefore, we apply the 1990 sex ratio of Sichuan to Chongqing.
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Appendices
Appendix 1: Global Sex Ratio at Birth in 2011 (A Partial List)
This table reports a partial list of global sex ratio at birth in 2011, reported in World Factbook published by the Central Intelligence Agency (https://www.cia.gov/library/publications/download/download-2011/).
Country | Sex ratio at birth (male/female) | Global rank of sex ratio at birth |
|---|---|---|
China | 1.13 | 1 |
Armenia | 1.12 | 2 |
India | 1.12 | 3 |
Albania | 1.12 | 4 |
Vietnam | 1.12 | 5 |
Azerbaijan | 1.12 | 6 |
Georgia | 1.11 | 7 |
Grenada | 1.10 | 8 |
San Marino | 1.09 | 9 |
Kosovo | 1.08 | 10 |
Taiwan | 1.08 | 11 |
Isle of Man | 1.08 | 12 |
Republic of Macedonia | 1.08 | 13 |
Singapore | 1.08 | 14 |
Hong Kong | 1.07 | 15 |
Bosnia and Herzegovina | 1.07 | 16 |
Montenegro | 1.07 | 17 |
Faroe Islands | 1.07 | 18 |
Gibraltar | 1.07 | 19 |
Tunisia | 1.07 | 20 |
South Korea | 1.07 | 21 |
Malaysia | 1.07 | 22 |
Suriname | 1.07 | 23 |
Portugal | 1.07 | 24 |
Luxembourg | 1.07 | 25 |
Spain | 1.06 | 28 |
Sweden | 1.06 | 36 |
Russia | 1.06 | 39 |
Italy | 1.06 | 54 |
Canada | 1.06 | 63 |
Japan | 1.06 | 63 |
Australia | 1.05 | 66 |
Denmark | 1.05 | 66 |
Germany | 1.05 | 66 |
Norway | 1.05 | 71 |
Switzerland | 1.05 | 71 |
Netherlands | 1.05 | 76 |
United Kingdom | 1.05 | 76 |
United States | 1.05 | 147 |
Appendix 2: Variable definitions
Variable | Definition |
|---|---|
Big firm indicator | An indicator variable that takes the value of 1 if the firm’s total assets are in the top quartile of the sample, and 0 otherwise |
Capex | Capital expenditures normalized by total assets |
Firm age | Number of years since the firm went public |
GDP per capita | Total GDP divided by the resident population in a province |
Leverage | Book value of debts normalized by total assets |
Manager age | Age of the manager |
M/B | Market value of equity to book value of equity |
Pay gap | Difference between a female manager’s Ln (total compensation) and the average Ln (total compensation) of male managers who are in the same province and same industry and hold the same position |
Percentage of female directors | Number of female directors normalized by the total number of directors |
Percentage of female executives | Number of female executives normalized by the total number of executives |
Percentage of female executives and directors | Number of female executives and directors normalized by the total number of executives and directors |
ROA | Net income normalized by average total assets at the beginning and the end of the year |
Sex ratio at birth | Ratio of number of newborn boys over the number of newborn girls in a province |
Sex ratio in labor force | Ratio of the number of men in the labor force over the number of women in the labor force in a province |
Sex ratio with college degree | Ratio of number of men with college degree over the number of women with college degree in a province |
Stock volatility | Standard deviation of monthly stock return for the prior 60 months |
Tenure | Number of years the executive is in the position |
Total assets | Book value of total assets (US$ millions) |
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Gao, H., Lin, Y. & Ma, Y. Sex Discrimination and Female Top Managers: Evidence from China. J Bus Ethics 138, 683–702 (2016). https://doi.org/10.1007/s10551-015-2892-x
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DOI: https://doi.org/10.1007/s10551-015-2892-x