Women and corporate boards of directors: The promise of increased, and substantive, participation in the post Sarbanes-Oxley era

Few aspects of corporate board diversity have generated the focused attention that the participation, position, and promise of women's service on the board has generated, especially in recent years. Of particular note is the extent to which women serve on large firm boards of directors (e.g., Fortune 500 firms). Increases in levels of participation have been described as glacial. While critics decry the level of participation of women on large-scale corporate boards, careful scrutiny suggests substantial progress. Concurrent with steady increases in the overall participation of women on corporate boards are increases in their presence on key board committees. Importantly, women's leadership of key board committees and their service as lead directors has improved in parallel with increases in their board memberships. These increases are particularly noteworthy in the post Sarbanes-Oxley (SOX) period. Such trends suggest the continued progress of women in assuming prominent positions in the corporate governance landscape, and provide evidence that the increasingly challenging environment in the post-SOX era has not attenuated the gains noted in the pre-SOX period.     

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.     

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.     

Why and how should SHE make her way into the family business boardroom?

The most successful and longest-enduring family firms are progressively encouraging the active presence of women on their corporate boards. Why is the presence of women on boards so important for family firms? And how can policy makers and controlling owners encourage the active presence of women on family business corporate boards? By integrating the literature on women in governance and the goals of family businesses, we take a step toward increasing shareholder awareness of the economic and noneconomic benefits that women can bring to the family business boardroom. Using theory and empirical evidence, we show that the presence of women on corporate boards can be instrumental for the controlling owners of a family business to achieve prosperity and success, to preserve family cohesion, and to improve the reputation of the family and business simultaneously. Furthermore, we discuss the socioemotional and economic ramifications of excluding women from the family business board of directors. We conclude with four practical recommendations for encouraging the active presence of women on family business boards.     

The Media Impact of Board Member Appointments in Spanish-Listed Companies: A Gender Perspective

Recent corporate governance literature on gender diversity within boards has linked the effect of an increase in gender diversity to the firm’s corporate reputation. This paper analyzes the media impact of appointing new directors of Spanish companies at a particularly significant moment, during the period from 2007 to 2010, just a year before and 3 years after the Gender Equality Act was passed. By analyzing female and male board nominations in Spanish IBEX-35 companies, the paper examines whether appointing a female does have greater visibility than appointing a male, and thus a potential signaling effect for corporate stakeholders and an effect on the firm’s reputation. Results indicate that the effect on press visibility of appointing a female versus a male is negligible, although there is significant media visibility for new executive directors, in particular for the case of the only woman nominated as an executive director during the period. The paper contributes to the existing literature on gender diversity in corporate governance, specifically its effect on corporate reputation. The paper also offers information relevant to policy making and in particular to the current debate over quotas for women on boards.     

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.     

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.     

Women Directors on Corporate Boards: From Tokenism to Critical Mass

Academic debate on the strategic importance of women corporate directors is widely recognized and still open. However, most corporate boards have only one woman director or a small minority of women directors. Therefore they can still be considered as tokens. This article addresses the following question: does an increased number of women corporate boards result in a build up of critical mass that substantially contributes to firm innovation? The aim is to test if ‘at least three women’ could constitute the desired critical mass by identifying different minorities of women directors (one woman, two women and at least three women). Tests are conducted on a sample of 317 Norwegian firms. The results suggest that attaining critical mass – going from one or two women (a few tokens) to at least three women (consistent minority) – makes it possible to enhance the level of firm innovation. Moreover, the results show that the relationship between the critical mass of women directors and the level of firm innovation is mediated by board strategic tasks. Implications for both theory and practice, and future research directions are discussed.     

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.     

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.     

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 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.     

Board Composition and Corporate Social Responsibility: An Empirical Investigation in the Post Sarbanes-Oxley Era

Although the composition of the board of directors has important implications for different aspects of firm performance, prior studies tend to focus on financial performance. The effects of board composition on corporate social responsibility (CSR) performance remain an under-researched area, particularly in the period following the enactment of the Sarbanes-Oxley Act of 2002 (SOX). This article specifically examines two important aspects of board composition (i.e., the presence of outside directors and the presence of women directors) and their relationship with CSR performance in the Post-SOX era. With data covering over 500 of the largest companies listed on the U.S. stock exchanges and spanning 64 different industries, we find empirical evidence showing that greater presence of outside and women directors is linked to better CSR performance within a firm’s industry. Treating CSR performance as the reflection of a firm’s moral legitimacy, our study suggests that deliberate structuring of corporate boards may be an effective approach to enhance a firm’s moral legitimacy.     

Critical Mass of Women on BODs, Multiple Identities, and Corporate Philanthropic Disaster Response: Evidence from Privately Owned Chinese Firms

Although previous studies focus on the role of women in the boardroom and corporate response to natural disasters, none evaluate how women directors influence corporate philanthropic disaster response (CPDR). This study collects data on the philanthropic responses of privately owned Chinese firms to the Wenchuan earthquake of May 12, 2008, and the Yushu earthquake of April 14, 2010. We find that when at least three women serve on a board of directors (BOD), their companies’ responses to natural disasters are more significant. Age diversity among women on BODs as well as good corporate profitability (e.g., high earnings per share) positively moderates the relationship between women on BODs and CPDR.     

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.     

Resistance to Change in the Corporate Elite: Female Directors’ Appointments onto Nordic Boards

In this empirical study, we investigate the variation in firms’ response to institutional pressure for gender-balanced boards, focusing specifically on the preservation of prevailing practices of director selection and its impact on the representation of women on the board of directors. Using 8 years of data from publicly listed Nordic corporations, we show societal pressure to be one of the determinants of female directorship. Moreover, in some corporations, the director selection process may work to maintain “a traditional type of board”. In such boards, demographic diversity among male members appears to be associated with a lower share of female directors, although we cannot establish wether this reflects discrimination or a desire to maintain critical competencies. With this paper we add to the theoretical understanding of the factors underlying female board appointments by adopting an institutional theory lens to study female board representation. Viewing the demands for gender-balanced boards in terms of societal pressure for the de-institutionalization of the prevailing norms and practices, we highlight preferences for maintaining established practices as a potentially important barrier to institutional change. On these grounds, we conjecture on the relationship between the gender diversity of boards and other diversity dimensions. We suggest that a board room gender quota (if implemented) is supplemented by policies to ensure the transparency of board changes, in order to prevent the crowding out of other diversity dimensions.     

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.     

Gender Diversity on European Banks’ Boards of Directors

This article investigates the gender diversity of the corporate board of European Union banks. Employing a large sample of 612 European banks from 20 European countries, it identifies organizational characteristics that could be predictive of women??s presence on bank boards. We identify three factors that play a particularly important role in defining bank board gender diversity. First, the proportion of women on the board is higher for lower-risk banks. We argue that there may be some statistical discrimination behind this relation, although it could also be explained by a real risk-aversion hypothesis. Second, banks with larger boards have a higher proportion of women on their boards, which could be considered a signal of some kind of preference for homogeneity on small boards. Finally, banks that have a growth orientation are more prone to include women on their board, since they may be seen as providers of diverse external resources that are more valued by firms operating under critical circumstances.     

The portrayal of women in Canadian corporate annual reports

We assess the inclusion of women in Canadian corporate annual report (CAR) photographs and on boards of directors at TSX100 firms and evaluate whether either is related to financial performance. We find that women are underrepresented in CAR photographs and on boards. In CAR photographs women are frequently portrayed as outsiders or less powerful organizational members than men. Higher return on equity (ROE) was found at companies that more frequently depicted women in their CAR photographs. However, no association was observed between the inclusion of women on the board and the ROE of the firm. The applied and theoretical implications of these results are discussed. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.     

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.