Investors’ Judgments of the Reliability of Gender Pay Information

This study examines the joint effect of gender pay information and financial performance news on investors’ perceptions of the reliability of gender pay disclosures. It further investigates whether external assurance can mitigate investor scepticism when credibility risk is elevated. The study employs a 2 × 2 + 1 between-subjects experimental design involving UK investors, in the context of mandatory gender pay gap reporting under the UK Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. The experiment manipulates two independent variables: Gender Pay Information and Financial Performance News. An additional condition introduces assurance in the highest-credibility-risk setting – when gender pay equality information is disclosed alongside negative financial performance news. The results reveal that investors’ perceived reliability of gender pay information is significantly lower when a company discloses gender pay equality information alongside negative financial performance news. In this high-credibility-risk setting, external assurance significantly enhances perceived reliability. This study is the first to explore the interaction between gender pay information and financial performance news in shaping investors’ perceptions of the reliability of gender pay information. This research provides insights regarding investor reactions to gender pay information and the potential benefits of external assurance in enhancing trust in gender pay reporting.