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.     

Why so Few Women on Boards of Directors? Empirical Evidence from Danish Companies in 1998–2010

This paper analyzes the determinants of women’s representation on boards of directors based on a panel of all privately owned or listed Danish firms with at least 50 employees observed during the period 1998–2010. We focus on the directors who are not elected by the employees and test three hypotheses on female board representation that we denote the female-led hypothesis, the tokenism hypothesis, and the pipeline hypothesis, respectively. We find evidence rejecting the female-led hypothesis. Firms with a female chairperson on the board of directors tend to have significantly fewer other non-employee-elected female board members. We also find clear evidence of a tokenism behavior in Danish companies. The likelihood of enlarging the share of non-employee-elected female board members is significantly smaller if one, two, or more women have sat on the board of directors. Finally, the pipeline hypothesis is partly confirmed. The relation between the female pipeline of potentially qualified directors and female directors is weaker than the similar relation for males. Our findings offer insights to policy makers interested in promoting gender diversity within boardrooms. Our empirical evidence suggests that an important way to increase the female proportion of non-employee-elected board members is that more women reach top executive positions.     

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.     

Gaijin invasion? A resource dependence perspective on foreign ownership and foreign directors

While boards around the globe are becoming more international, the reasons behind this internationalization are not fully understood. In this study, we suggest that foreign ownership increases the presence of foreign directors on boards. Based on resource dependence theory, we argue that the dependence on foreign owners makes foreign nationals an important resource for firms. Using data from large Japanese stock market firms and employing logistic regression analysis, we find empirical evidence that greater dependence on foreign, i.e. gaijin, owners is associated with a higher probability to have foreign directors on the board. We also demonstrate that the link between foreign ownership and foreign directors is positively moderated by a firm’s foreign market exposure. We conclude that firms consider foreign directors a viable response to the deviant expectations of foreign owners.     

Are Demographic Attributes and Firm Characteristics Drivers of Gender Diversity? Investigating Women’s Positions on French Boards of Directors

In this article, we examine the factors determining the representation of women on boards of directors by considering three main questions. The first question deals with the relationship between characteristics of ownership and governance on one side, and female directorship on the other. The second major question concerns the demographic attributes of women directors, such as nationality, foreign experience, educational level, business expertise, and connections to external sources. The third important question refers to women in senior positions on French boards (e.g., as independent members or board subcommittee members) in relation to firm characteristics and women’s demographic attributes. Our study focuses on French large- and mid-capitalized companies belonging to the SBF120 stock market index during a 5-year period running from 2000 to 2004. First, our results give evidence that the appointment of women directors is strongly related to family ownership and board or firm size. Second, the appointment of women directors is related to their professional services, valuable skills, and network links. Furthermore, we show that women face a double glass-ceiling problem, and note that French firms rely more on the demographic attributes of their women directors when they are appointed to senior board positions. Our study sheds light on issues concerning the law that comes into force in 2016, which imposes quotas of women members on boards of directors in French companies.     

Board structure and role of monitoring committees

Regulators and researchers alike have focused significant attention on the structure of the corporate board. In general, the results of prior empirical studies suggest that larger boards are costly to firms because of communication and co-ordination problems. How firms use committees to mitigate these costs, however, has not received as much attention. Since boards delegate authority for specific tasks to monitoring committees with independent directors, we re-examine the impact of board structure on firm performance by specifically focusing on the number of monitoring committees. Using ROA and EVA, we find that board size is positively associated with firm performance when firms use more than three monitoring committees. We also find that the previously documented negative association between board size and Tobin's Q disappears when a firm uses more than three monitoring committees. Overall, the results suggest that firms use monitoring committees to mitigate the costs associated with larger boards.     

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.     

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.     

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.     

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.     

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.     

Women on board and performance of family firms: Evidence from India

This paper provides empirical evidence on the effect of woman directors on performance of family firms in the context of an emerging economy. Using data from India covering periods prior to and post institution of gender quotas, we find evidence that the presence of woman directors on board leads to higher firm performance. However, this positive effect is driven by independent woman directors. Further this effect gets attenuated when family members occupy key management positions in the firm. We conclude that governance structures of firms in emerging economies matter for the impact of woman directors on firm performance.     

Integrating agency and resource dependence theory: Firm profitability,industry regulation,and board task performance

Boards of directors are key governance mechanisms in organizations and fulfill two main tasks: monitoring managers and firm performance, and providing advice and access to resources. In spite of a wealth of research much remains unknown about how boards attend to the two tasks. This study investigates whether organizational (firm profitability) and environmental factors (industry regulation) affect board task performance. The data combine CEOs' responses to a questionnaire, and archival data from a sample of large Italian firms. Findings show that past firm performance is negatively associated with board monitoring and advice tasks; greater industry regulation enhances perceived board task performance; board monitoring and advice tasks tend to reinforce each other, despite their theoretical and practical distinction.     

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.     

Should governments mandate more female board representation? Possible intended and unintended consequences

Using data on more than 4,000 product recalls, we recently found that firms whose boards of directors include more women are significantly faster to recall dangerously defective medical products. More specifically, adding just one female director to a board with no women did not speed recalls, but increasing from one female director to two, from two to three, and so on led to increasingly faster recalls. This provides initial evidence that consumer safety can be improved through including more women on companies’ boards. Assuming data from other settings support our findings, it is tempting to conclude that governments should mandate a certain level of female board representation, especially for firms in consumer product sectors such as medical devices, food, toys, and automobiles. We suggest, however, that policy makers need to carefully think through the possible intended and unintended consequences of dictating board composition in terms of gender. Meanwhile, wise companies will recognize the benefits of greater female board representation and will pursue it without government intervention.     

Regulatory Sanctions on Independent Directors and Their Consequences to the Director Labor Market: Evidence from China

We investigate the regulatory sanctions imposed on independent directors for their firms’ financial frauds in China. These regulatory sanctions are prima-facie evidence of significant lapses in business ethics. During the period 2003–2010, 302-person-time independent directors were penalized by the regulator (the China Securities Regulatory Commission—the CSRC), and the two stock exchanges. We find that the independent directors with accounting experiences are more likely to be penalized by the CSRC, though they do not suffer more severe penalties than do the other sanctioned independent directors. We also find that independent directors suffer less severe penalties than do the insider directors. These results are consistent with the hypothesis that the sanctions on independent directors are tied to their assumed ethical and legal responsibilities. Following a regulatory sanction, penalized independent directors experience a significant decline in the number of other board seats held. However, they can gain board seats in better quality firms. We find that interlocked firms that share penalized independent directors with the fraud firm do not suffer from a valuation decline. Overall, our results suggest that regulatory sanctions have not triggered further sanctions on the penalized directors in the labor market but they have, instead, created a disincentive for these directors to serve on the company boards of high-risk firms.     

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.     

Firm performance and boardroom gender diversity: A quantile regression approach

We investigate the relation between firm performance and boardroom gender diversity using quantile regression methods. Using annual data on over 3000 US firms from 2007 to 2014, we show that the presence of women on the board has a positive effect on firm performance, and this effect varies at different parts of the performance distribution. Critically, we demonstrate that the presence of women directors alters the dispersion of firm performance. Our quantile regression results suggest that female directors have a significantly larger positive impact in high-performing firms relative to low-performing firms. The board gender diversity effect is not homogeneous as assumed in previous research. In addition, we account for the endogenous selection of women to the board. Using instrumental variable quantile regression, we find that in general there is a positive correlation between firm performance and board gender diversity. Overall, we suggest that boardroom gender diversity has an effect on both the conditional mean and the dispersion of firm performance, and quantile regression adds value to the empirical examination of the performance impact of board gender diversity.     

Women Board Directors: Characteristics of the Few

Appointment as a director of a company board often represents the pinnacle of a management career. Worldwide, it has been noted that very few women are appointed to the boards of directors of companies. Blame for the low numbers of women of company boards can be partly attributed to the widely publicized "glass ceiling". However, the very low representation of women on company boards requires further examination. This article reviews the current state of women's representation on boards of directors and summarizes the reasons as to why women are needed on company boards. Given that more women on boards are desirable, the article then describes how more women could be appointed to boards, and the actions that organizations and women could take to help increase the representation of women. Finally, the characteristics of those women that have succeeded in becoming members of company boards are described from an international perspective. Unfortunately, answers to the vexing question of whether these women have gained board directorships in their own right as extremely competent managers, or whether they are mere token female appointments in a traditional male dominated culture, remains elusive.