Female Board Representation Research Articles

The Effect of Bundling Trade Association Monitoring and Female Board Representation on Loan Losses in Community Credit Unions

Loan book management is important to community credit union survival, particularly in deprived localities. Consistent with agency theory, prior studies of credit unions report an association among individual monitoring mechanisms, trade association monitoring, and female board representation, respectively, and reduced loan losses. This study provides a more nuanced understanding by investigating the moderating influence of these monitoring mechanisms on the relationship between loan losses and deprivation and by considering the effect of bundle combinations of different levels of the two monitoring mechanisms on loan losses. The results reveal that credit unions subject to trade association monitoring have the lowest loan losses. However, in the absence of trade association monitoring, female board representation has a moderating effect on loan losses as deprivation increases. Finally, trade association monitoring and female board representation have a substitutive, rather than a complementary effect on loan losses.

Would Overconfident CEOs Engage More in Environment, Social, and Governance Investments? With a Focus on Female Representation on Boards

This study examines the relationship between CEO overconfidence, environment, social, and governance investments, and firm value. Drawing on insights from upper echelon and agency theory, greater female representation on boards is expected to act as an independent monitoring mechanism to control and reconcile CEO overconfidence which leads to enhancement of corporate value induced by environment, social, and governance investments. Empirical evidence in this study finds that, on average, overconfident managers tend to engage in ESG investments in South Korea. Furthermore, in firms with high environment, social, and governance investments, the negative association between CEO overconfidence and firm value is mitigated, showing that environment, social, and governance investments are effective moderators in controlling and constraining managerial overconfidence. Finally, we find that the joint impact of CEO overconfidence and environment, social, and governance investments on corporate value is distinctive in firms with female board representation. Taken together, we find that negative effects associated with CEO overconfidence can be alleviated by the role of female leadership that links corporate environment, social, and governance investments to firm value.

The long-term effects of female board representation on accounting quality: Causal evidence

This paper investigates how women’s representation on corporate boards affects financial reporting quality. Drawing on a discussion of existing research, I argue that increasing women’s representation on boards reduces undue CEO influence over the board, and thereby, accounting quality will improve. Using a difference-in-difference (DiD) approach, this paper documents how increasing female representation increases accounting quality. This result holds only in the long run as females gain more experience in the boardroom. In addition, I show that the effect of female representation on accounting quality is attenuated for larger firms and larger boards. This is consistent with the notion that the effect of female representation is likely to be stronger when the information friction is higher. These findings challenge the conventions that underscore the importance of board diversity for today’s firms.

Should governments mandate more female board representation? Possible intended and unintended consequences

Using data on more than 4,000 product recalls, we recently found that firms whose boards of directors include more women are significantly faster to recall dangerously defective medical products. More specifically, adding just one female director to a board with no women did not speed recalls, but increasing from one female director to two, from two to three, and so on led to increasingly faster recalls. This provides initial evidence that consumer safety can be improved through including more women on companies’ boards. Assuming data from other settings support our findings, it is tempting to conclude that governments should mandate a certain level of female board representation, especially for firms in consumer product sectors such as medical devices, food, toys, and automobiles. We suggest, however, that policy makers need to carefully think through the possible intended and unintended consequences of dictating board composition in terms of gender. Meanwhile, wise companies will recognize the benefits of greater female board representation and will pursue it without government intervention.

Gender Board Diversity and the Cost of Bank Loans

We examine the relationship between female board representation and the cost of lending, using a dataset that contains 13,714 loans originated by 386 banks matched with 2,432 non-financial firms over the period 1999 to 2013. We find that firms with female directors command lower loan spreads. In addition, female independent directors have a stronger impact on lowering spreads compared to female directors' other attributes. However, as firms build relationships with their lenders this effect becomes less potent. Finally, when we introduce firm-level heterogeneity we document that changes in gender diversity exert a stronger impact on the cost of lending in the case of financially constrained firms, especially for relationship borrowers.

Gender board diversity and the cost of bank loans

We examine the relationship between female board representation and the cost of lending, using a dataset of 13,714 loans from 386 banks matched with 2432 non-financial firms from 1999 to 2013. We find that firms with female directors command lower loan spreads. In addition, female independent directors have a stronger impact on lowering spreads compared to female directors' other attributes. However, as firms build relationships with their lenders this effect becomes less potent. Finally, when we introduce firm-level heterogeneity we document that changes in gender diversity exert a stronger impact on the cost of lending in the case of bank-dependent firms, especially for relationship borrowers.

Women on boards of directors and firm performance: the mediation of employment downsizing

This study contributes to the literature of women on boards of directors by showing how female board representation affects the board’s involvement in the strategy of employment downsizing, and whether the downsizing strategy mediates female directors’ influence on firm performance. We examine data of Taiwanese 1329 manufacturing firms over the 1996–2017 period and apply dynamic panel methods to deal with the endogeneity problems contained in the mediation model. Evidence on the gross effect of women on boards supports our contention that in Taiwanese socio-cultural context, the cognitive frames and human capital female directors bring to boards can improve the firms’ accounting-based performance; however, investors’ ingrained bias against women may dilute the positive impact and lead to unfavorable stock market reaction to the firms with female directors. Focusing on the indirect mediating effect, our results indicate that perhaps because female directors’ leadership style and core values provide boards with more stakeholder-oriented perspectives, the firms with more women directors tend to implement less downsizing, and such talent-retaining strategy is beneficial to firm performance. This positive indirect effect is investors’ bias-free, that is, women on boards can be leveraged for higher accounting returns and stock market valuation through their involvement in downsizing.

Evaluating Board Candidates: A Threat-Contingency Model of Shareholder Dissent Against Female Director Candidates

Given the growing corporate social responsibility (CSR) pressures to increase board gender diversity and the scrutiny afforded to firms that fail to appoint female directors, one may expect shareholders to vote with greater support for women (than for men) nominated to boards. However, diversity management research suggests that pressures to improve female representation in organizations and in leadership roles may also backfire. We propose a threat-contingency model of shareholder dissent against female director candidates to explain when shareholders will be more or less likely to dissent against female (relative to male) directors. Specifically, we advance CSR legitimacy threats and agency threats as conditions contextualizing shareholder dissent against female director candidates. Using a sample of 50,202 director elections at 1,104 public firms from 2003 to 2015, we find that female directors receive less dissent from shareholders; further, low female board representation intensifies this leniency as CSR legitimacy threats become more salient. However, when firm-related agency threats occur (e.g., firm underperformance and media controversies), shareholders’ leniency toward female director candidates dissipates, and when directors themselves present agency threats (e.g., director attendance problems and nonindependence), shareholders evaluate female directors more harshly than male directors. Underlining the relevance of our theory, our supplementary analyses show that shareholder dissent increases the probability of director turnover. These findings contribute to theory and research on women on boards, firm responses to institutional pressures, and shareholder dissent.

Female Directors and Firm Performance: Evidence from Saudi Arabia

This study examines the relationship between female board representation and performance of Saudi nonfinancial listed firms. Using a sample of 350 firms over the period 2016 to 2019, the study finds that neither female board representation nor the attributes of the women in the sample (qualification, experience, and independence) are significantly related to firm performance. The current study also finds that the diligence of female directors does not modify the relationship between their board representation and the performance of Saudi nonfinancial listed firms. Considering the fact that no Saudi nonfinancial listed firm has more than two female members on its board, the result of this study suggests the importance of having a critical mass of female board directors in order to make a greater contribution to firm performance. Furthermore, current female board representation supports the notion of tokenism in Saudi businesses. Keywords : female board representation, performance, Saudi nonfinancial listed firms. DOI: 10.7176/RJFA/11-24-04 Publication date: December 31 st 2020

The impact of the 2012 NZX listing rule change on board composition and company performance

PurposeThis study aims to examine the impact of December 2012, New Zealand (NZ) stock exchange operator listing rule change that introduced compulsory disclosure about gender diversity on NZ boards.Design/methodology/approachA quasi-natural experiment setting with a clearly identifiable exogenous event.FindingsThe rate of growth in female-held directorships increased significantly after the introduction of the new rule, resulting in, by 2016, the average female board representation being more than double what it had been in 2012. However, this paper finds no relationship between this response and company performance.Research limitations/implicationsThis study cannot attribute causality to the observed jump in female directorships following the 2012 listing rule change due to the absence of a control group of firms not subject to this change.Practical implicationsThe results are consistent with an efficient director appointment process in NZ.Originality/valueLow-key regulatory changes can have a significant impact on company behaviour.

Establishing the boundary conditions for female board directors’ influence on firm performance through CSR

Integrating social role theory and stakeholder theory with group diversity literature and using data from a sample of S&P 1500 firms from 2007 to 2015, this study examines the boundary conditions under which female board representation increases firm performance through their positive influence on corporate social responsibility (CSR). Specifically, the effects of female board representation on firm performance through CSR is most pronounced when female directors have a greater power to promote CSR and when the firm has the motivation (i.e., being innovation intensive) to engage in CSR. Moreover, this moderated mediation model holds especially for three dimensions of CSR (e.g., environment, community, and employee relations), shedding light on the nuances of what women bring to the table.

How Does the Stock Market Value Female Directors? International Evidence

We analyze investors’ perception and long-term effects of board gender diversity on firms’ stock market performance in an international setting. Our results, controlling for the endogenous nature of board compositions, indicate that female board representation neither improves nor reduces firms’ long-term stock performance. Hence, we argue that it is imperative to go beyond the conventional thinking in terms of the business case for gender diversity and broaden the perspective also to incorporate societal and ethical aspects in the strive to board gender equality. Even more so, as our results show that it does not entail reduced shareholder value, which the literature on mandatory gender quotas commonly seems to suggest.

Female Representation on Radiology Journal Editorial Boards Around the World: Geographical Differences and Temporal Trends

We examined the status of women's representation on radiology journal editorial boards around the world and evaluated temporal trends in female board representation. Data on the gender of editorial board members, deputy editors, and editors-in-chief of top general radiology journals from the United States and from five continents outside North America was collected, based on listings in mastheads of each journal at 5-year intervals from 1998 to 2018. Female editorial board representation was compared to female membership in national professional radiology organizations and national physician registries. One of 42 editors-in-chief (2.4%), 24 of 135 deputy editors (17.8%), and 345 of 2545 (13.6%) editorial board members were female for the 20-year period. The overall percentage of female editorial board members increased from 9.7% (41 of 423) in 1998 to 17.0% (97 of 569) in 2018 (p < 0.0001). In 2018, women were less represented on the editorial boards than female professional society membership for all geographic regions except Australia/New Zealand; this difference reached statistical significance in Korea, Brazil, Europe, and China. Female editorial board representation ranged from 11.3% to 33.3%, with no significant difference between the United States (21.5%) and other countries. Although the proportion of female editorial board members of radiology journals worldwide has increased over the past two decades, female editorial board composition generally underrepresents the percentage of female radiologists. Editorial board female representation does not differ significantly between the United States and other countries.

The Global Drivers of Female Board Representation: A Stereotype Activation Perspective

We integrate gender stereotype theories under a theoretical framework of stereotype activation to theorize and test the effects of legislative quotas on two distinct aspects of female board representation – selection (female board percentage) and retention (female board turnover). Results based on a longitudinal dataset of 1071 firms across 42 countries and supplementary interviews show that quotas positively relate to both female board percentage and turnover. Based on stereotype activation theory, quota helps women bypass gender barriers created by social-role-based stereotype to promote women’s access to boards, while simultaneously activating the stigma of incompetence stereotype that jeopardizes women’s retention on boards. Moreover, the national culture of gender egalitarianism moderates these relationships by suppressing the salience of the two gender stereotypes. Specifically, quotas relate more positively to female board percentage and less positively to female board turnover, when gender egalitarianism in the home country is higher than when it is lower. Taken together, the nuanced theoretical underpinnings and our findings on the complex effects of quotas on female board representation reconcile the fierce global debate on quotas by decoupling the enabling and inhibiting effects of quotas on different facets of corporate boards and identifying important boundary conditions.

Gender equality's impact on female directors’ efficacy: A multi-country study

This paper studies the role of gender equality in female directors’ efficacy and its subsequent effects on firms. Female directors in more gender equal societies should possess greater skills and exert more influence due to better access to educational/professional opportunities and more amicable boardroom dynamics. Therefore, we hypothesize that gender equality serves as an important moderator in the relation between female board representation and firm outcomes. Using a multi-national panel comprising 1986 public firms from 24 countries or areas spanning from 2007 to 2016, we obtain results that firms with higher female board representation exhibit higher overall performance, less earnings management, and less excessive risk taking, in which all three relations are stronger in countries with greater gender equality. Taken together, our paper implies that the impact of female directors on firm outcomes depends on a country's overall level of gender equality.

Board Characteristics and Corporate Social Responsibility: A Meta-Analytic Investigation

Boards of directors affect corporate strategy and decision-making through monitoring of management and resource provision. Recently, an increasing number of studies have examined the relationships between board characteristics and corporate social responsibility (CSR). These studies have yielded inconsistent findings. This article therefore reports the results of a study applying meta-analytical techniques to a sample of 82 empirical studies to help clarify the relationships between board characteristics and CSR. Although prior research has tended to apply relatively simplistic models investigating the impact of individual board characteristics independently and only directly, we adopt a more complex perspective to shed new light on the board characteristics–CSR nexus. Specifically, we use a meta-analytic path model that accounts for the potential interplay between board characteristics in determining CSR and tests whether the presence of a CSR committee plays a meditating role. Our findings suggest that board size, board independence, and female board representation are partially interrelated with each other and jointly influence CSR directly as well as indirectly via the presence of a CSR committee. In addition, we find that country-level institutional factors act as moderators and that the relationships differ with regard to the specific dimension of CSR (i.e., social, environmental, or aggregate).

Women on board: the disregarded issue of board interlocks

PurposeGender diversity is extensively debated and researched in relation to corporate boards. The focus on the gender composition on single boards neglects an important issue: that of how the power of board members is impacted by their representation on other boards. Board interlocks refer to how a board member is also represented on other companies’ boards, and such representation expectedly makes the individual board member more influential in the boardroom than non-connected board members. The purpose of this paper is to investigate whether and how female board interlocks are considered in previous research on gender diversity on boards.Design/methodology/approachA systematic literature review was conducted. It comprised 71 highly cited articles. The articles were analyzed to grasp their content, and specifically, female influence in the boardroom related to power.FindingsThe literature review reveals that the interlock perspective is rare in studies on women’s board representation. This is so, even while evidence is provided that females often need companions to get their meanings across on the boards, despite how interlocks would create one link of such power, and although the literature points to how female board representation plays a part to explain performance, social responsibilities and overall strategic directions of firms.Originality/valueContributions are made to previous research by indicating the potential of further research in a largely neglected area of research while also summarizing the previous reporting on women on boards.

Female board representation, risk-taking and performance: Evidence from dual banking systems

This paper investigates whether the presence of female directors is significantly smaller for Islamic banks than their conventional counterparts and more importantly how different is the performance of Islamic banks with females in the board vis-a-vis conventional banks. We find that Islamic banks have just slightly lower female directors in their boards and their performance is not affected by the appointment of females on the board differently than conventional banks. Our findings highlight that promotion of gender equality and adopting inclusion culture even in religiously conscious corporations such as Islamic banks do not adversely affect the performance.

Board gender diversity, audit committee and financial performance: evidence from Nigeria

ABSTRACT This paper considers the effects of female representation and the proportion of female representation on corporate boards and audit committees on financial performance in an African context where institutions are weak. Employing a panel of 77 firms, our results show that female board representation exerts a positive and significant influence on firm financial performance. The study also finds that the performance effect of gender diversity is stronger for firms with two or more female directors, suggesting that building a critical mass of female representation enhances firm financial performance. Further analysis indicates that the inclusion of females on the audit committee appears to have a positive impact on firm financial performance. Our results are robust after controlling for endogeneity and the use of alternative measures of board gender diversity.

Female representation on boards and CEO performance‐induced turnover: Evidence from Russia

AbstractResearch Question/IssueThis study examines the influence of female board representation on CEO turnover and firm value. We focus on Russia, a patriarchal country with vast gender differences, where empathy, patience, and supportiveness are considered fundamental qualities of females.Research Findings/InsightsUsing a sample of public firms listed on the Moscow Exchange from 2006 to 2015, we find that female representation on boards is associated with lower CEO turnover–performance sensitivity. Further, female boards appear to add firm value, as we find that CEO retention decisions are associated with improved future firm value when the decision is made by a female board. Furthermore, we identify that female representation on boards is associated with greater diligence (i.e., hold more board meetings) after retaining their underperforming CEOs.Theoretical/Academic ImplicationsOur findings suggest that female boards tend to develop a long‐term view of CEO performance and that such boards exercise greater diligence and supportiveness, thereby adding shareholder value. Our results also indicate that patience and collaboration of corporate boards afford opportunities to develop strategic thinking, which is particularly valuable for a firm in times of crisis. Our study contributes to the research on what qualities of a board affect its decision making and effectiveness. Our research also adds to the literature on female board representation. We study Russia, where gender differences are prominent, and female representation occurs by happenstance rather than regulatorily / intentionally. Overall, we are able to attribute our findings to female representation on boards.Practitioner/Policy ImplicationsOur study contributes to the burgeoning research on corporate governance in Russia. Although the Russian economy has demonstrated unprecedented growth among emerging markets, research on corporate governance in Russia remains scarce. Our study is among the first efforts to understand how female boards perform in a patriarchal country. Our investigation, therefore, offers important insights for policymakers and practitioners.