The impact of gender quotas on corporate boards: a cross-country comparative study

Abstract

Drawing on institutional theory and resource dependence theory, this study examines whether mandating gender quotas for corporate boards is associated with a greater presence of women on boards, better accounting-based and market-based performance, more innovativeness, and more external female directors. Based on a cross-country comparative sample of companies from 18 countries, our results suggest that organizations in countries where gender quotas are implemented show better market-based performance and better board vigilance through a higher number of external directors than organizations in countries where quotas are not implemented. The direct impact of gender quotas on innovativeness and accounting performance is not observed. Our findings add to the institutional theory literature by suggesting that companies respond strategically and show acquiescence in their strategic response when institutional pressure addresses ethical concerns (gender diversity). The results support institutional theory’s contentions that companies from countries mandating gender quotas are valued more highly by the market. Nevertheless, the impacts on accounting performance and innovativeness are not apparent. Additionally, adopting a resource dependence approach, we find that the presence of women on boards is associated with more efficient corporate governance practices. The results of this study demonstrate the positive implications of gender quotas for company boards. The upper echelons of companies and country policymakers may better understand the importance of diversity and the presence of female directors on company boards.