Gender diversity on corporate boards: Directors’ perceptions of board functioning and gender quotas

Abstract

This research explores how increased gender diversity on corporate boards in Iceland, driven by applying a “hard” public policy, i.e., board gender quota legislation, has affected post-quota board directors’ perceptions of board functioning. This study falls into the growing literature on board diversity (Boshanna, 2021; Li et al., 2020). Directors’ opinions towards board decision-making and monitoring activities are researched, as well as their effect on corporate governance practices. A survey was answered by 244 board directors in Iceland. Results show that the initial attitude towards gender quotas was more negative among male directors than female directors but became more similar and positive over time. Strong support is found for increased female board participation leading to different viewpoints being discussed at the board table in addition to better decision-making. A similar picture emerges regarding the behavior of holding chief executive officers (CEOs) accountable and being more focused on corporate governance practices. These results were significantly the view of female directors and directors chairing the assessed board. Male directors are more negative than their female counterparts about the short term effect of increased female participation is having on board dynamics. This research indicates that a gender quota has led to increased female board participation in addition to impacting decision-making corporate norms, according to directors, as policymakers intended.