Does board gender diversity reduce workplace sexual harassment?

Abstract

AbstractResearch Question/IssueWe contrast the predictions of gender socialization theory and “fem‐power washing” (deceptively positioning as a firm promoting female empowerment without any tangible actions) to investigate whether promoting female directors on the board of directors associates with a reduction in the prevalence of firm‐level workplace sexual harassment (SH).Research Findings/InsightsWe estimate the incidence rate of SH through textual analysis of US employees' job reviews published online during the period 2011–2021. We find that an increase of one female director is associated with a 21.81% decrease in workplace SH and that firms with high board gender diversity synchronize the reduction in SH with improved social policies (e.g., policies to better employee relations, health and safety, or diversity challenges). Our results do not support the fem‐power washing theory but rather imply that nominating female directors may have a profound impact on the firm's ethical culture.Theoretical/Academic ImplicationsThis study validates the ethical dimension of corporate governance: Nominating female directors impacts a firm harassment culture and, by extension, a firm's ethical and corporate culture. This study adds to the governance literature that debates the merits of board gender diversity by highlighting an oft‐ignored channel through which board diversity affects firm value: ethics and corporate culture.Practitioner/Policy ImplicationsFor boards of directors, having more female directors can curb workplace SH, a behavior that is associated with a severe and lasting negative effect on firm value. For practitioners, regulators, and the business community, this study reinforces the merits of aiming towards more gender‐balanced boards.