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E-MailKatharina Lewellen is a Professor of Finance at the Tuck School of Business at Dartmouth. This post is based on her recently published article in the Journal of Finance.
While women continue to be underrepresented in executive leadership, the U.S. hospital sector offers a rare opportunity to study a sizable number of female CEOs in a relatively homogeneous, data-rich setting. In this paper, I examine the decision-making, compensation, and turnover of nearly 4,400 hospital CEOs (819 of them women) over a 19-year period, using financial, operational, and governance data from nonprofit hospitals.
Contrary to prior research suggesting that women exhibit more risk aversion or altruistic preferences, I find no systematic differences in the corporate policies or decision-making of male and female hospital CEOs. There is no evidence that female CEOs match with hospitals that pursue more conservative investment or financing strategies, serve poorer communities, or devote more resources to charity care. Furthermore, female and male CEOs responded similarly to the 2008 financial crisis across multiple dimensions, including investment and employment—suggesting that gender does not influence strategic responses to financial shocks.
In contrast to the similarity in decision-making, compensation and turnover outcomes differ starkly by gender. Female hospital CEOs earn 32% less than their male counterparts on an unconditional basis. Controlling for hospital size, fixed effects, and CEO characteristics, the gap narrows but remains statistically significant at 7.8%. More strikingly, pay-for-performance sensitivity is flatter for women—CEO pay increases by 15% for male CEOs in the top quintile of financial performance, compared to 5.3% for female CEOs. Meanwhile, turnover-performance sensitivity is higher for women: female CEOs are substantially more likely to be replaced following periods of poor performance.
These asymmetric outcomes are consistent with theories of CEO labor markets in which boards—or the constituencies they represent—perceive women as less skilled or productive. Consequently, boards pay female CEOs less, give them weaker incentives, and dismiss them more readily. Yet, hospital performance metrics—financial and nonfinancial—are not significantly different under male and female leadership.
While differences in educational and career backgrounds exist—most notably, female CEOs more often start in nursing, male CEOs in business—the pay gap remains robust even after controlling for these factors. There is also no evidence that the presence of women on hospital boards improves the career outcomes of female executives, suggesting that attitudes towards gender may be broadly shared among decision-makers.
The nonprofit hospital setting—with its rich data and higher share of female leaders—offers a unique and revealing lens on the persistent gender gaps in corporate leadership. It also highlights a nuanced paradox: hospital boards appear to penalize women as if they managed their firms differently or less effectively, yet there is little evidence of such differences based on publicly observable metrics. The implications extend beyond healthcare, particularly in sectors where performance is difficult to observe and stereotypes are more likely to persist.
