Gender diversity on boards for organizational impression management: An empirical study of Japanese firms

The literature on gender diversity on corporate boards is growing, yet firms' motivation for achieving such diversity remains underexplored. This study examines the potential objective behind appointing female directors that could be driven by organizational impression management based on the hypothesis that firms strategically propose to nominate female directors when they need to form a favorable impression to their stakeholders, especially in relation to executive compensation. This study analyzed annual shareholders meeting agendas for 3585 listed Japanese firms between 2011 and 2020 and found that firms placed female director appointments on the meeting agenda when they needed approval for the revision of executive compensation. This tendency was strengthened for firms with more outside directors. This study's approach and findings contribute to the literature on corporate board gender diversity by suggesting organizational impression management as a potential strategic motivation behind the appointment of female directors.     

Media visibility and board gender diversity

Despite the efforts of governments and market regulators, the under-representation of women on corporate boards continues to be a global concern. In this context, this study extends prior literature by investigating the relationship between media visibility and gender diversity on boards of directors. We examine a sample of 101 Spanish nonfinancial listed firms over the period 2003–2016. We find that media visibility positively affects board gender diversity. This finding is robust to alternative measures of media visibility and different econometric specifications. This research contributes to the existing literature on the relationship between media and board composition by suggesting the role of the media as a driver of board gender diversity. Results support the notion that the media are able to discipline managers and dominant owners by inflicting reputational costs.     

Female Presence on Corporate Boards: A Multi-Country Study of Environmental Context

A growing body of ethics research investigates gender diversity and governance on corporate boards, at individual and firm levels, in single country studies. In this study, we explore the environmental context of female representation on corporate boards of directors, using data from 43 countries. We suggest that women’s representation on corporate boards may be shaped by the larger environment, including the social, political and economic structures of individual countries. We use logit regression to conduct our analysis. Our results indicate that countries with higher representation of women on boards are more likely to have women in senior management and more equal ratios of male to female pay. However, we find that countries with a longer tradition of women’s political representation are less likely to have high levels of female board representation.     

Women’s Roles on U.S. Fortune 500 Boards: Director Expertise and Committee Memberships

This study examines the presence and roles of female directors of U.S. Fortune 500 firms, focusing on committee assignments and director background. Prior work from almost two decades ago concludes that there is a systematic bias against females in assignment to top board committees. Examining a recent data set with a logistic regression model that controls for director and firm characteristics, director resource-dependence roles and interaction between director gender and director characteristics, we find that female directors are less likely than male directors to sit on executive committees and more likely than male directors to sit on public affairs committees. There is little if any evidence of systematic gender bias in director assignment to other board committees. We find some evidence that boards evaluate resource dependence differently for women than men. Craig A. Peterson Western Michigan University, Grand Rapios, MI 49503, USA Craig A. Peterson is associate professor of finance at Western Michigan University, Grand Rapids Regional Center. In addition to corporate governance, his research interests include investment management and corporate finance. James Philpot is assistant professor of finance and general business at Missouri State University. His research interests include corporate governance, financial planning and financial education.     

Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

This paper investigates the effect of female representation on the board of directors on corporate response to stakeholders’ demands for increased public reporting about climate change-related risks. We rely on the Carbon Disclosure Project as a sustainability initiative supported by institutional investors. Greenhouse gas emissions measurement and its disclosure to investors can be thought of as a first step toward addressing climate change issues and reducing the firm’s carbon footprint. Based on a sample of publicly listed Canadian firms over the period 2008–2014, we find that the likelihood of voluntary climate change disclosure increases with women percentage on boards. We also find evidence that supports critical mass theory with regard to board gender diversity. These findings reinforce initiatives being undertaken around the world to promote gender diversity in corporate governance while demonstrating board effectiveness in stakeholder management.     

Investor reaction to women directors

Existing studies on women directorships present equivocal results on the association between appointing women directors and firm performance. These studies tend to focus on western countries and largely ignore investors' reactions to such appointments. This paper applies the financial event study method and finds that investors generally respond positively to the appointment of women directors in Singaporean firms. Regression analyses also reveal that investors are most receptive when the women are independent directors and are least receptive when the directors assume the CEO role. This study not only tests the theory of gender diversity in an Asian context but also examines whether investors react systematically to the different positions that women directors hold on corporate boards, a question that has received little attention in prior studies.     

Board diversity in the United Kingdom and Norway: an exploratory analysis

This paper examines the evolving pattern of gender diversity of the boards of directors of leading Norwegian and British companies on a longitudinal basis. The period covered by the study covers the run up to proposed affirmative action legislation in Norway and, as such, affords an insight into corporate actions in this emerging institutional context. The findings demonstrate that, while board diversity has grown substantially in both countries in recent years, it has done so considerably more rapidly in Norway than in the United Kingdom. The analysis highlights the sectoral variation between the countries in the pattern and growth of board diversity and suggests that the vast majority of the overall growth in board diversity is the result of changing firm behaviour rather than sectoral shift in the United Kingdom or Norwegian economies. It is also shown that as diversity has increased there has been no fall in how experienced female directors are; neither is there evidence of a rise in the number of boards that female directors sit on. This suggests that the rapid growth in board diversity has been achieved without any fall in the quality of female directors.     

The Gender Quota and Female Leadership: Effects of the Norwegian Gender Quota on Board Chairs and CEOs

In this article, we use a sample of Norwegian quoted companies in the period of 2001–2010 to explore whether the gender quota requiring 40 % female directors on corporate boards changes the likelihood of women being appointed to top leadership roles as board chairs or corporate CEOs. Our empirical results indicate that the gender quota and the resulting increased representation of female directors provide a fertile ground for women to take top leadership positions. The presence of female board chairs is positively associated with female directors’ independence status, age and qualification, whilst the presence of female CEOs is positively related to the average qualification of female directors. Firms with older and better educated female directors are more likely to appoint female board chairs. The likelihood of female CEOs’ appointment increases with the percentage of independent directors and directors’ qualifications, especially those for female directors. Furthermore, the gender gaps with respect to qualification, board interlocks and nationality between female and male board chairs vanishes after Norwegian companies’ full compliance to the quota in January 2008. However, the gender quota has no significant impact on the gender gaps between female and male directors after its full compliance. Our article thereby contributes to understanding how gender quotas, presence of female directors, percentage of female directors on boards and other board characteristics can determine the gender of top leaders of organizations.     

Gender Diversity in the Boardroom and Risk Management: A Case of R&D Investment

Increasing gender diversity in the boardroom has been promoted as a way to enhance corporate governance and risk management. This study empirically examines whether boards with more female directors play a role in reducing R&D risk. We first show that female directors help to reduce the positive relationship between R&D investment and future performance volatility. We then report that firms with more gender-diverse boards exhibit a lower adverse effect of R&D on the cost of debt. These results are robust to endogeneity analysis, alternative measures of gender diversity and risky investment, and other sensitivity tests. Overall, our results suggest that female directors improve board effectiveness in risk management with respect to R&D investment.     

The Impact of the Dual Board Structure and Board Diversity: Evidence from Chinese Initial Public Offerings (IPOs)

Chinese listed companies have a two-tier (dual) governance structure that comprises a supervisory board/committee (SB) and the board of directors (BoD). However, as there is no hierarchical relationship between them, the two boards are independent. This is different from the governance mechanism in Continental Europe in which the SB appoints the directors of the management board; in this sense, the Chinese two-tier governance structure is unique. We investigate the impact of governance characteristics and ownership structure on gender diversity of both the BoD and the SB for a sample of 892 Chinese Initial Public Offerings floated in both the Shanghai and Shenzhen Stock Exchanges. We find that the average proportion of female directors and female SB members on the BoD and the SB are 10 and 22 %, respectively. Using both static and dynamic panel data methods, we find that there is no significant impact of board structure on gender diversity in China. However, we find a positive and significant relationship between SB size and gender diversity. We also find that the higher the state ownership, the lower the female representation on both boards. Finally, our findings show that there is a bi-directional relationship between financial performance and the proportion of female directors sitting on the BoD.     

Women on the Board and Managers’ Pay: Evidence from Spain

The current literature shows great interest in the issue of gender diversity on boards of directors. Some studies have hypothesized a direct relationship between diversity and the value of the firm, but not many examine the intermediate mechanisms that may exert an influence on such relationships. We employ two stages of GMM estimation methodology to exhibit evidences of the relationship between gender diversity and compensation of top managers in the Spanish context. Results show that gender diversity positively affects the effectiveness of boards—in terms of composition, structure, size and functioning—influencing a proper design of top managers compensation linked to company performance. Evidences suggest that legislative actions aimed at increasing the presence of women on boards of directors are justified not only for ethical reasons, but also for reasons of economic efficiency.     

Gender Diversity in the Boardroom and Firm Financial Performance

The monitoring role performed by the board of directors is an important corporate governance control mechanism, especially in countries where external mechanisms are less well developed. The gender composition of the board can affect the quality of this monitoring role and thus the financial performance of the firm. This is part of the “business case” for female participation on boards, though arguments may also be framed in terms of ethical considerations. While the issue of board gender diversity has attracted growing research interest in recent years, most empirical results are based on U.S. data. This article adds to a growing number of non-U.S. studies by investigating the link between the gender diversity of the board and firm financial performance in Spain, a country which historically has had minimal female participation in the workforce, but which has now introduced legislation to improve equality of opportunities. We investigate the topic using panel data analysis and find that gender diversity – as measured by the percentage of women on the board and by the Blau and Shannon indices – has a positive effect on firm value and that the opposite causal relationship is not significant. Our study suggests that investors in Spain do not penalise firms which increase their female board membership and that greater gender diversity may generate economic gains.     

Commitment of independent and institutional women directors to corporate social responsibility reporting

This paper examines how independent and institutional women directors on boards affect corporate social responsibility (hereafter CSR) reporting. Most of the previous empirical evidence has shown a linear association between female directors and CSR disclosure, but to the best of our knowledge, no research has investigated the individual effect of independent and institutional female directors on CSR reporting. Therefore, the analysis of how the disclosure of CSR information is affected by independent and institutional women directors in a separate way merits our attention. Thus, we posit that there is a nonlinear association, concretely quadratic, between independent and institutional female directors on boards and CSR reporting. Our results demonstrate that, in line with the monitoring hypothesis, as the presence of independent and institutional women directors on boards increases, the CSR disclosure improves, but when their presence on boards reaches a tipping point (20.47% and 13.32%, respectively), CSR reporting decreases, which is consistent with the collusion hypothesis. This research contributes to the existing literature on the relationship between board gender diversity and CSR disclosure by suggesting that board structures formed by institutional and independent female directors have an effect on CSR reporting. Hence, female directors play a relevant role on boards since they may influence the CSR disclosure.     

Does female human capital constrain earning management: The case of the United Kingdom

This paper examines how the presence of female directors on corporate boards influences the practice of real and accrual earning management in U.K. firms. We account for the endogeneity of a range of corporate governance measures, including female board representation, with regards to earning management and demonstrate that ignoring this problem may lead to perverse results. We find that female board representation constrains both forms of earning management. Our results provide evidence that female directors bring considerable and diverse human capital, enhance board monitoring and contribute to a qualitative shift in the decision-making process in the boardroom. We suggest that boards’ gender diversity and earning management is an overlooked area in the United Kingdom and globally and may require the attention of regulators.     

The gender composition of corporate boards and firm performance: Evidence from Russia

This paper studies economic effects of the gender composition of corporate boards, employing a novel longitudinal dataset of publicly traded Russian companies over 1998–2014. Using multiple identification approaches, alternative measures of gender diversity, and several performance indicators, we find some evidence that companies with gender-diverse boards have higher market values and better profitability. These effects are particularly pronounced when firms appoint several women directors, which is consistent with the critical mass theory. The effects appear to be stronger in bad economic times. Overall, we find some support to “the business case” for more women on corporate boards.     

How Does Legitimacy Operate in Emerging Capital Markets? Investigating the Moderating Effects of Premium Listings and Firm Size on Risk

Drawing on an institutional theoretical perspective, we investigate the impact of the origins of organizational legitimacy on systematic risk using a sample of 358 Brazilian companies between the years 2002 and 2007. We regard three origins of legitimacy—formal–regulatory (presence in premium listings), cultural–cognitive (board of directors), and normative legitimacy (reputation)—to empirically investigate how a company's size and adherence to premium lists moderate other sources of legitimacy. Our results indicate that only under apparently better quality corporate governance conditions—presence in premium listings—do corporate reputation and the board of directors reduce systematic risk. In addition, we show that the effect of reputation on risk is positively moderated by firm size. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Market Risk Disclosures and Board Gender Diversity in Gulf Cooperation Council (GCC) Firms

We investigate the impact of board gender diversity on corporate risk reporting for Gulf Cooperation Council (GCC) financial firms. Recent developments and improvements of corporate governance in the GCC markets suggest that firms in the GCC have become more transparent with less information asymmetry. However, we find that the presence of female directors in the boards of financial institutions suppresses the positive association between corporate governance and market risk disclosures for the period between 2007 and 2011. These findings suggest that culture and conservatism nature of GCC societies persist in the GCC business environment. Our results are robust to alternative specifications and endogeneity tests.     

Democracy across Gender Diversity and Ethnicity of Middle Eastern SMEs: How Does Performance Differ?

This paper examines the relationship between boards of directors' demographic diversity and firms' financial performance. In particular, we highlight how women and ethnic minorities can affect Middle Eastern SMEs' financial performance. Using an unbalanced panel of 1,855 firm‐year observations of 371 boards of directors from nine Middle Eastern countries, our results support the positive impact of women and ethnic minority group members on Middle Eastern firms' performance. However, our evidence implies that when Western ethnic minority members increase, firms' performances tend to decrease, because these board members are appointed for regional and international board reputation legitimacy, personal business agendas, and links to the external corporate environment.     

Institutional Investors on Boards: Does Their Behavior Influence Corporate Finance?

We examine whether the behavior of institutional investors representatives on boards leads to observable differences in corporate finance. We find that directors representing pressure-sensitive investors (i.e., banks and insurance companies) prefer lower financial leverage whereas pressure-resistant directors (i.e., mutual funds and pension funds) show no particular preference. When analyzed separately, directors appointed by banks and insurance firms have different attitudes. Bank representatives on boards increase both the financial leverage and the banking debt. This result suggests that some types of institutional directors provide financial resources to the firms on whose board they sit, supporting the view that boards manage the uncertainty associated with strategic decision making and provide firms with preferential access to resources and financial expertise. This research has interesting academic and policy implications for the debate over the proper degree of institutional involvement in corporate governance. Different institutional investors have different agendas and incentives for corporate governance, and, therefore, both researchers and policy makers should no longer consider institutional investors as a whole. In addition, our paper calls for new research on the causes and implications of institutional investor involvement in the corporate governance of nonfinancial firms. This new research could require new insights on the dynamics within the boards and on the interplay among the knowledge, incentives and attitudes of quite different directors.     

Strategic and Regulatory Approaches to Increasing Women in Leadership: Multilevel Targets and Mandatory Quotas as Levers for Cultural Change

While substantial evidence is emerging internationally of positive increases in the participation of women on company boards, there is less evidence of any significant change in the proportion of women in senior executive ranks. This paper describes evidence of positive changes in the number of women on boards in Australia. Unfortunately these changes are not mirrored in the senior executive ranks where the proportion of women remains consistently low. We explore some of the reasons for these disproportionate changes and examine the likely effect of the recent amendments to the Australian stock exchange’s corporate governance code designed to improve gender diversity both on boards and throughout organisations. Based on the early corporate response to these regulatory changes, it is interesting to consider whether Australia’s approach in promoting voluntary self-regulation at the corporate level may be as effective in the long run as the emerging trend in Europe to apply legislated quotas for female corporate board representation. Interview evidence is presented suggesting that the primary reasons for the lack of women in leadership are not simply lack of opportunity at the apex of the corporation, but issues at mid-management level that are unlikely to be resolved by mandatory board quotas. In some circumstances carefully monitored voluntary targets may be more effective at promoting cultural and strategic change at the heart of the corporation. In summary, mandatory quotas (set through hard law usually with sanctions for noncompliance) may achieve early and significant results in terms of female board representation. However, voluntary targets for women’s participation on boards and in executive ranks (proposed in soft regulation such as corporate governance codes and set as part of corporate strategy) may promote more effective cultural and practical change in support of greater representation of women in leadership.