Proactive government intervention, board gender balance, and stakeholder engagement in China and Europe

Abstract

This study assesses the management quality and corporate social performance of firms supervised according to three distinctly different governance regimes. The differences relate to protocols and interventions on board gender balance. Sweden and Norway serve as our strongly gender-inclusive (SGI) benchmarks, with the UK and China as our respective moderately (MGI) and weakly gender-inclusive (WGI) domains. Our evidence shows that corporate social performance ratings have risen appreciably between 2010 and 2015 in each of China, the UK, Sweden and Norway. Moreover, corporate social responsibility (CSR) ratings in Sweden, Norway and the UK appear broadly comparable. In extending Ahern and Dittmar’s (Quarterly Journal of Economics, 127, 137–197, 2012) evidence of a quota’s initial deleterious effect on managerial quality, we observe improvement in Norwegian firms’ directors’ educational profiles as quotas become more entrenched. Average director age (experience) also rose in such firms over the study period. Our results suggest some degree of adaptation in the application of board quotas. Additionally, variation in female board participation exerts minimal (strong) influence on CSR ratings for SGI- (MGI- & WGI-) domain entities. Findings on this issue for China and the UK strongly support a critical mass theory (CMT; Konrad, Kramer, & Erkut, Organizational Dynamics, 37(2), 145–164, 2008) conception of corporate social-engagement. Finally, results reveal a non-uniform relation between corporate social and financial returns. Overall, we add new context to institutional theory narratives on stakeholder-engagement (Campbell, Academy of Management Review, 32(3), 946–967, 2007; Young & Makhija, Journal of International Business Studies, 45, 670–698, 2014).