Women on boards of directors and firms' social performance: A meta-analysis

Abstract

Numerous studies have found that firms with more female directors have higher social performance -- however, this positive association may reflect reverse causality. Because existing theory is too parsimonious, we developed a theory that explicitly models the bi-directionality of firms’ female board representation and their social performance and that accounts for likely contingencies. In a meta-analysis of 48 independent samples, we test our novel theoretical model and seek to determine the relative contribution of these two causal paths: (1) as a more community-minded resource on the board, female directors tend to improve firms’ social performance, or (2) as an attractive opportunity, more socially-responsible firms attract female directors. We find that the female board representation- social performance relationship is more positive when the supply of qualified female directors is greater, when female directors approach a critical mass on boards, when firms operate in countries where socially responsible business practices are more institutionalized, and when firms operate in countries where shareholder protections are stronger. Taken together, these results lend more support to the argument that a stronger presence of female directors on a board enhances corporate social performance than to the argument that higher social performance attracts more female directors to a board.