More Talk, Less Action: Companies Touting Gender Equity Often Have Larger Pay Gaps

Investors and environmental rating agencies may believe a company that openly shares information about the number of women it employs, its mentoring initiatives for women, and other gender diversity information is ahead of the curve in creating a more equitable workplace, but research shows just the opposite: Businesses that voluntarily disclosed their gender diversity performance actually showed a wider gender pay gap.

“Traditionally, we might think that the firms that do better in a particular dimension are going to disclose more about that dimension. But that turned out not to be the case when we look at gender diversity performance,” Harvard Business School Assistant Professor Shirley Lu says. “Interestingly, we find worse gender pay gaps the more they talked about their initiatives.”

Despite decades of attention, the pay gap between men and women has proven persistent. In the United States, the difference between men’s and women’s earnings has narrowed only slightly, with women earning 85% of what men took home in 2024, compared to 81% in 1983, according to the Pew Research Center.

Lu cowrote the paper, “Gender Diversity Performance and Voluntary Disclosure: Mind the (Gender Pay) Gap,” with June Huang, assistant professor at the University of Texas at Dallas. The research was published in the journal Accounting, Organizations and Society in June.

Companies that disclosed more fared worse

The US lacks gender pay gap disclosure requirements, and few companies voluntarily report such data. What’s more, less than a quarter of the largest US companies even analyze their pay figures by gender, and if they do, they are not compelled to report them publicly, according to JUST Capital, a nonprofit organization that ranks companies based on socially responsible performance.

In 2017, however, United Kingdom regulators began requiring large companies to report gender pay gap data, using standardized metrics to ensure they all measured compensation figures in the same way. In a review of 150 of the largest companies on the Financial Times Stock Exchange that were required to report the data, Lu and Huang found that men earned 20% more on average than women. And the researchers found that firms that had made voluntary gender-related disclosures in 2016 actually had worse gender pay gaps in 2017 than companies that had made no disclosures.

The researchers found that the year before the UK regulations took effect, many companies voluntarily reported the number of female leaders and disclosed efforts like mentorship and recruitment programs aimed at women, as well as family-friendly policies. Such disclosures often came from firms in industries that had poor reputations for gender equity.

In 2015, for instance, politicians criticized the lack of gender diversity in the finance and insurance sector, which had one of the largest industry-level gender pay gaps in the UK, with men making 38% more than women. The researchers’ findings suggest that many of these companies wrestling with gender diversity and pay equity challenges decided to disclose the information because they wanted to legitimize their reputation with regulators, shareholders, and prospective employees.

Meanwhile, companies with a reputation for better gender diversity and smaller pay gaps may not have seen a need to make voluntary disclosures, she says.

“It’s not free to make these disclosures,” Lu explains. “You have to spend money doing a gender diversity audit or doing research into your employees’ compensation structure, and that takes a lot of time and effort. If everyone thinks you’re great, and you’re not being required to disclose anything, you have little incentive to do that.”