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Gender diversity on corporate boards: Evaluating the effectiveness of shareholder activism

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  • Rastad, Mahdi
  • Dobson, John

Abstract

In this paper, we examine the effectiveness of shareholder activism as a change mechanism for improving gender diversity on corporate boards. We provide evidence that shareholders use both internal pressure through private negotiations that lead to a withdrawn proposal, and external pressure by submitting a proposal to vote in the annual shareholders’ meeting to draw public attention. While both are impactful, we find that improvement in board gender diversity is more responsive to private negotiations than to social pressure. We also find that shareholders’ votes in favor of diversity proposals are higher when a board is less diverse; but it’s the very existence of a proposal that matters and not how many votes it receives. Finally, we find that proposals sponsored by institutional investors are more effective in bringing gender diversity to corporate boards.

Suggested Citation

  • Rastad, Mahdi & Dobson, John, 2022. "Gender diversity on corporate boards: Evaluating the effectiveness of shareholder activism," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 446-461.
    • Handle: RePEc:eee:quaeco:v:84:y:2022:i:c:p:446-461
    DOI: 10.1016/j.qref.2020.09.007
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    More about this item

    Keywords

    Gender diversity; Gender diversity quota; Women on board; Shareholder activism; Board of directors; Corporate boards; Shareholder proposals; Social responsibility;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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