Political connections and remuneration of bank board's members: Moderating effect of gender diversity

Catarina Proença, Mário Augusto and José Murteira
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Catarina Proença: University of Coimbra, Ph.D. Student at Faculty of Economics
Mário Augusto: University of Coimbra, Centre for Business and Economics,CeBER, Faculty of Economics
José Murteira: University of Coimbra, Centre for Business and Economics,CeBER, Faculty of Economics

No 2020-08, CeBER Working Papers from Centre for Business and Economics Research (CeBER), University of Coimbra

Abstract: This study investigates the effect of the political connections of members of banks' Boards of Directors on the remuneration of these boards, taking into account the gender diversity of their members. Using a panel of observations on 77 banks supervised by the ECB for the period 2013 to 2017, and the generalized method of moments (GMM), our results show that, when analyzing linear effects, political connections have a negative impact on the remuneration of the members of the banks' Boards of Directors, reducing them. However, when investigating the possible moderating effect, we found that when gender diversity is high, there is a non-linear, inverted U-shaped relationship between the political connections and the remuneration of members of the Boards of Directors of banks. Our results also show that the differentiating characteristics of the female gender, accentuate the negative effects of political connections on remuneration, making the institution's interests to be privileged at the expense of those of its personal agendas. Overall, these general results prove to be robust across different choices of the measures used for gender diversity.

Keywords: Political connections; Gender diversity; Remuneration; ECB; GMM. (search for similar items in EconPapers)
JEL-codes: G21 G28 G34 G41 J16 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-06
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:gmf:papers:2020-08

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