Authors: Rachel Bi, Chong Meng
Mentors: Rachel Bi
Insitution: Utah Valley University
The full proposal is available upon request. This research project is sponsored by the Bonnie Ballif-Spanvill Endowed Fellowship, which provides $10,000 in funding.
Abstract:
Over the past decade, the financial technology (FinTech) industry has experienced remarkable growth and innovation, with new products and services designed to meet the evolving needs of consumers. This rapidly expanding force is challenging and disrupting traditional financial industries in terms of product innovation, customer satisfaction, and employer demand in the labor market. In fact, global FinTech investments have soared from less than $2 billion to an impressive $142 billion in 2021, and this upward trend is expected to continue (Balyuk, Berger, and Hackney, 2020). While previous studies have focused on the impact of FinTech on income inequality, little is known about the potential of this digital technology to address gender inequality (Loko and Yang, 2022).
This proposal seeks to address a specific aspect of gender inequality: the gender pay gap in finance. This term refers to the wage disparity between male and female executives in the industry. Our objective is to analyze women's compensation within the FinTech sector, identify factors contributing to the gender pay gap, and develop recommendations to address this issue. Specifically, we have the following hypotheses:
H1: Gender pay gaps among executives should shrink in the FinTech industry.
Public FinTech firms are typically younger and smaller than other publicly traded companies. Because managers in smaller firms are generally less risk-averse and have a stronger preference for taking risks, we hypothesize that the gender pay gap between female and male executives could widen due to differences in risk-aversion.
H1a: Gender pay gaps among executives should enlarge in the FinTech industry.
Our second hypothesis centers on comparing gender pay gaps in the pre- and post-initial public offering (IPO) stages of the same company. The public market is widely recognized as crucial in overseeing and limiting managers' pursuit of risk (Asker, Farre-Mensa, and Ljungqvist, 2015). If executives' risk aversion changes with access to the public market, we anticipate that gender pay gaps will decrease following IPOs. Therefore,
H2: Gender pay gaps among executives should shrink in FinTech firms after their initial public offerings.
Institutional investors in the public market can shape the internal corporate governance structure (Dasgupta, Fos, and Sautner, 2021). We anticipate that board diversity, measured by the percentage of female executives on the board, will increase after IPOs. Consequently, we predict that the changes in gender pay gaps between the pre-IPO and post-IPO periods will be more noticeable when the board is less diverse prior to IPOs.
H2a: The decrease in gender pay gaps should be more pronounced when the board of a Fintech firm is less diversified before IPOs.