Shades of Power: Network Links with Gender Quotas and Corporate Governance Codes

Abstract

AbstractThis study analyses the impact of political and regulatory pressures to increase the influence of women within the European board of directors’ network. To accomplish this, we used a longitudinal approach, tracking two centrality measures of a European directors’ network from 1999 to 2014. The network comprised publicly listed firms in 37 European countries, resulting in an extensive sample of 71,300 directors, of which around 10% were women. Governments promoting gender diversity in leadership positions have focused on two solutions: a slow track using voluntary approaches versus a fast track pushing for binding legislation. The panel data analysis shows how voluntary approaches to promote gender diversity, as implemented through corporate governance codes, have a positive and significant relationship with the ‘closeness’ of women to other directors in the network (i.e. their access to information). In contrast, binding legislation, such as gender quotas, increases women's role as unique ‘bridges’ between sub‐networks – a result that serves to heighten their ‘betweenness’ centrality (i.e. their control over information).