Independent Female Directors Research Articles

Board gender diversity and sustainability reporting quality

Based on the notion that a diverse board will take a more balanced view and pay greater attention to social responsibility and stakeholder concerns, this paper examines the effect of board gender diversity, measured using a range of proxies, on sustainability reporting quality. After controlling for corporate governance as well as firm reporting incentives, reporting behaviour and reporting environment, we find that gender diverse boards are associated with higher quality sustainability reports and independent female directors have greater effect on sustainability reporting quality than female directors. Our findings have implications for policy formulation and provide evidence for a softer ‘comply or explain’ (as opposed to quota based) approach to encourage board gender diversity and its effects on sustainability reporting quality.

Corporate governance, female directors and quality of financial information

The aim of this study is to examine whether gender diversity on audit committees (hereinafter, ACs) influences financial reporting quality by using panel data of Spanish listed firms. The financial reporting quality of firms is measured by the type of opinion received in the audit report. We estimate various panel data models of audit opinions and control for factors that are traditionally found to impact audit opinions. This study provides evidence to support the hypotheses that the percentage of females on ACs reduces the probability of qualifications due to errors, non‐compliance or the omission of information. Furthermore, the results also find that the percentage of female directors on ACs, the percentage of independent female directors on ACs and ACs chaired by females increase the likelihood of further transparency by disclosing audit reports with uncertainties and scope limitation qualifications.

Women on Boards and Corporate Social Responsibility

A growing body of research suggests that having more women in the boardroom leads to better corporate social responsibility (CSR) performance. However, much of this work views the CSR-enhancing effect of women directors as largely driven by their moral orientations and rarely considers other underlying mechanisms. Moreover, less explored are the firm-specific conditions under which such CSR-promoting roles of female directors might be performed more (or less) effectively. In this paper, we seek to bridge this gap in the literature by (1) proposing an additional account for the positive influence of female independent directors on the firm’s CSR and (2) illuminating the organizational context in which female directorship is likely to translate into good CSR performance. We argue that women independent directors might take CSR issues more seriously than their male counterparts not only because of their stronger moral orientations, but also because they have reputational reasons to do so. Further, we suggest that female directors’ concerns about CSR-relevant matters are more (less) likely to gain support from other members of the organization when their company is doing more (less) business in the product markets where reputation for CSR is more (less) vital for success. Using a sample of Standard & Poor’s (S&P) 1500 index firms (2000–2009) and the data on their board composition and CSR ratings, we find strong support for our argument. We find that the number (or proportion) of women independent directors is positively associated with a firm’s CSR ratings and that the strength of this relationship depends on the level of the firm’s consumer market orientation.

Do Locally-Based Independent Directors Reduce Corporate Misconduct?

This paper explores the influence of geographic proximity of independent directors has on reducing listed firms’ fraudulent and noncompliant practices. Our choice of using local versus non-local independent directors as a focus of study is motivated by the relevance of geographic proximity in the prior literature on auditing, analysts’ reporting, and institutional investing. Through the analyses of A-share listed firms in China between 2007 and 2013, we find that local independent directors reduce both the frequency and magnitude of the misconduct of listed firms. Furthermore, we find that political connections of independent directors reduce the effect of local independent directors’ monitoring function, whereas the higher ratio of female independent directors enhances the monitoring effect. Our findings have the following policy implications: 1) geographic proximity should be considered when hiring independent directors because local directors can improve corporate governance; 2) political connections should be controlled in order to limit their negative effect on the performance of independent directors; 3) Gender diversity should be promoted when hiring local independent directors. We contribute to the literature on corporate governance and ethics by introducing the relevance of geographic proximity to corporate misconduct through corporate governance and highlighting the moderating effect of political connections and gender diversity.

The Impact of Board Gender Composition on Dividend Payouts

This paper investigates whether female independent directors are more likely to impose high dividend payouts. We find evidence that firms with a larger fraction of female directors on their board have greater dividend payouts. This finding is robust to alternative econometric specifications, and alternative measures of dividend payouts. The positive effect of gender composition on dividends remains when we employ propensity score matching and the instrumental variable approach to address potential endogeneity concerns. Furthermore, we find that board gender composition significantly increases dividends only for firms with weak governance, suggesting that female directors use dividend payouts as a governance device.

The board of directors and dividend policy: the effect of gender diversity

In this article, we aim to study the impact on dividends policy of gender diversity on the board of directors (hereinafter BD). We hypothesize that the proportion of women directors, the proportion of independent, institutional, and executive female directors, and the percentage of shares held by female directors on BD, have an impact on the dividends policy of Spanish companies. Our findings, analyzing the whole sample, show that the proportion of female directors and shares held by female directors are positively associated with dividend payout, while the percentage of institutional female directors has a negative impact. The percentage of independent and executive female directors has no effect on dividend payout. When companies with losses are removed from the sample, the findings report that the percentage of female directors on BD and the percentage of independent female directors impact positively on dividend policy, while the percentage of institutional and executive female directors has a negative effect. The proportion of shares held by female directors on BD does not have an effect on dividend payout when only companies with profits are examined. Thus, the results confirm that gender diversity has an influence on dividend payout, so the existing legislation should encourage more participation by women in governing bodies. Our evidence supports the Act for Effective Equality between Women and Men, which establishes that listing companies have to achieve a quota of 40% of women in decision-making bodies by 2015.

Gender Diversity on Board and Stock Market Liquidity: Empirical Evidence from the French Market

This study examines whether and how female board directors may affect stock market liquidity. The empirical analysis is drawn on a sample of 81 firms listed on the SBF 120 between 2002 and 2012. The paper considers several measures of liquidity and gender diversity. To assess the quality of corporate governance we rely on five scores on board structure, board function, compensation policy, shareholder rights, and vision and strategy. Our results provide evidence that gender diversity has no significant effect on stock liquidity. In addition, the presence of female directors on board seems to be explained by (1) the presence of women on boards in the past year, (2) the adoption of International financial reporting standards (IFRS) and (3) the listing on US markets.However, in several regressions, the number of female independent and non-executive directors increases when the firm displays several illiquidity issues. Finally, we figure out that firms with good corporate governance have more gender-diverse boards but the presence of female directors does not depend on the quality of governance.

Female directors and earnings management: Evidence from UK companies

Since the gender diversity of boards and reporting of earnings are two most debated issues in the corporate world, the paper examined how the presence of women directors on the corporate board influence earnings management practices. We found that firms with a higher number of female and independent female directors are adopting restrained earnings management practices in the UK. We further made a distinction between complex (high debt) and simple (low debt) companies, and the outcomes reveal that female directors have a positive effect on the earnings management in simple companies. The paper contributes to the debate on gender diversity on boards, and its impact on the use of accounting discretion in financial reporting.

Gender Diversity in the Boardroom on Private Equity Placements: Evidence from China

We address two main questions: (1) Do firms with greater gender diversity on their boards benefit from a reduction in the cost of private equity placements (PEPs)? That is, do they benefit from a reduction in wealth effects? (2) Do firms with greater gender diversity on their boards enjoy higher proceeds for PEPs? Moreover, we also investigate the moderating effects of PEP regulation change on relationship of board gender diversity and private equity placements (PEPs). Greater board gender diversity reduces the cost of PE offers and increases the proceeds from PEPs. Hence, firms with a gender diversified boardroom help to reduce the loss of wealth of the non-participating shareholders. In addition, independent female directors appear to be more beneficial to PE issuing firms than female executive directors, which supports the information asymmetry story and agency theory. However, regulation change was even helpful to decrease cost of PEPs in firms with male only board of directors. Institutional theory explains how normative behavior patterns are maintained or changed between organizations and their environments at industry and societal levels in this study. Upper echelons-UET, the resource dependence, organizational and Social capital theories explore how gender diversity of board room help for PEPs. This study explores for more theoretical perspectives on women on boards by analyzing the tensions between institutional theory and other different theoretical perspectives of gender diversity. From a practical perspective, our study suggests that greater gender diversity at the corporate board level produces positive financial and governance outcomes. Findings of this study also provide positive implications for improving gender fairness on the job market in China.

The gender gap in pay in company boards

The aim of this study is to analyze whether a gender wage gap exists in the boards of directors (BD) of companies listed on the Madrid Stock Exchange from 2004 to 2011. We hypothesize that the percentage of female directors on a BD, the presence of female directors on the Nomination and Compensation Committee, the presence of well-qualified independent women directors on BD, the sector, and the geographical region, have an effect on the gender wage gap. The results show that the percentage of female directors on a BD and the geographical region have no effect on the gender wage gap. On the other hand, the finding reports that women’s presence on the Nomination and Compensation Committee increases the gender gap in pay, and it is reduced when there are independent female directors who have gained a degree on the BD, and when the company operates in the finance and real estate services sector. In addition, the results also demonstrate that the seniority of the female directors decreases the gender gap in pay, while there is a rise when the companies are bigger and the size of the BD and the return on assets increase. These conclusions should encourage regulatory bodies to adopt forceful rules to mitigate the gender gap in pay.

Do women directors improve firm performance in China?

This paper examines the effect of board gender diversity on firm performance in China's listed firms from 1999 to 2011. We document a positive and significant relation between board gender diversity and firm performance. Female executive directors have a stronger positive effect on firm performance than female independent directors, indicating that the executive effect outweighs the monitoring effect. Moreover, boards with three or more female directors have a stronger impact on firm performance than boards with two or fewer female directors, consistent with the critical mass theory. Finally, we find that the impact of female directors on firm performance is significant in legal person-controlled firms but insignificant in state-controlled firms. This paper sheds new light on China's boardroom dynamics. As governments increasingly contemplate board gender diversity policies, our study offers useful empirical guidance to Chinese regulators on the issue.

Independent Directors and Risk Taking: Evidence from Listed US Insurance Companies

This study examines the relation of independent directors and their gender diversity, busyness, and experience with risk taking for 112 listed US insurance companies over 2003-2010. Using OLS, system GMM and 3SLS, we find that board independence, females amongst independent directors and busy boards are positively related to risk taking. While board tenure is not related to risk taking, experienced boards are found to be positively related to risk taking. Our study contributes by extending the board structure literature to show that the composition of independent board members matters for monitoring. Female independent directors, rather than simply female directors, improve board monitoring but that more than two does not. A higher percentage of non-busy directors may also mitigate the adverse effect of busy directors. Furthermore, experience gained through serving on the board improves monitoring.

Mergers and Acquisitions: The Role of Gender

This paper examines whether the gender of CEOs or corporate directors plays a role in the pricing of and returns on mergers and acquisitions. We show that the bid premium over the pre-announcement target share price is statistically and economically smaller if the CEO of the bidding company is a woman: ceteris paribus, the bid premium is reduced by over 70 percent. Also, the bid premium is statistically and economically smaller the larger is the proportion of women on the target company's board, provided that the female directors are independent appointees: each ten-percent of independent female directors on the target board reduces the bid premium by approximately 15 percent. The strong effects of gender on the bid premium are reinforced by substantially smaller target cumulative abnormal announcement period returns. The CEO gender effects are robust to the use of an alternative sample.

Corporate crime : by Marshall B. Clinard and Peter C. Yeager. The Free Press (866 Third Avenue, New York, New York 10022), 1980, 386 pp., softcover—$8.95.

The benefit of gender diversity on the board of directors is a subject of current debate. We contribute to the literature on diversity and its impact on businesses from an analytical framework that incorporates agency theory and the concept of socioemotional wealth (SEW). Our findings suggest that the inclusion of women on the board goes beyond ethical concerns being also relevant from a business perspective (i.e. increases risk-taking). The proportion of independent female directors on the board is shown to increase venturing risk (i.e. with the expectation of improving future performance), but does not interfere with performance hazard risk which conceptualizes the family desire to preserve SEW, especially in firms where these risks are low. By contrast, the proportion of non-independent female directors on the board increases significantly performance hazard risk, but only in family firms. In summary, we find with data from Latin America that the motivation for risk-taking differs depending on whether the appointment is as an independent female director, the type of risk and on whether the firm is controlled by a family.