Can board gender diversity promote corporate social performance?

Abstract

PurposeThis paper examines if gender diversity on corporate boards promotes corporate social performance (CSP) across industries and across countries.Design/methodology/approachFixed-effect panel models are estimated using Europe-wide data from 2002 through 2013. Instrumental variable estimation and propensity score matching are also used to control for potential endogeneity.FindingsBoard gender diversity (BGD) improves environmental and social performance and consequently the CSP. Although the positive effect of gender diversity is prevalent across industries, the effect is more pronounced for firms in emerging markets.Practical implicationsThe findings suggest that gender law that fosters gender diversity can promote CSP in firms, and the benefit can be enjoyed with just an introduction of one female director to the board. Promotion of gender diversity in Europe is most beneficial in emerging markets.Originality/valueThe results provide new insights to the literature, as we find that a critical mass of female directors on boards is not required to promote CSP. The research also highlights that BGD enhances CSP irrespective of the industry, and the effect on CSP is more pronounced in emerging markets where regulations regarding CSR are not so clear-cut.