Women on Corporate Boards as Symbolic Management

Abstract

The paper tests for the presence of symbolic management in the appointment of female board directors. We focus on the length of board service of male versus female directors, and make use of the impact of the Davies Review (Davies, 2011) to facilitate identification. The data are based on FTSE All-Share companies between 1996 and 2017. Following the Davies Review in 2011, there is now sufficient data on male and female director boardroom careers from both the pre- and post- 2011 period to conduct a `difference-in- differences' causal analysis. While the Davies Review has triggered a rise in the number of female non-executive director appointments, these women continue to experience a disproportionate exit rate around nine-years of tenure. The results support a symbolic management interpretation of female non-executive director appointments. The study is limited by right censoring. There are directors appointed post-2011 who have yet to complete their careers or cross the nine-year threshold. Our econometric analysis adjusts for this, but it remains a limitation that must be borne in mind. The discretion afforded by existing corporate governance guidelines can have the unintended consequence of accommodating the continued unequal treatment of female directors in the boardroom. The study exposes gender-based biases that persist in a high profile area (the boardroom). The Davies Review has certainly increased female representation in the boardroom but more remains to be done in terms of securing equal treatment for female directors once in post. The evidence presented here supports the view that female director appointments continue to be made for symbolic rather than substantive motives.