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Gender diversity in corporate boards: Evidence from quota-implied discontinuities

Author

Listed:
  • Olga Kuzmina

    (New Economic School)

  • Valentina Melentyeva

    (ZEW and University of Mannheim)

Abstract

Using data across European corporate boards, we investigate the effects of quota-induced female representation on firm value and operations. We use quasi-random assignment induced by rounding and find that promoting gender equality is aligned with shareholder interests. This result is in stark contrast with previous work finding large negative effects of women on firm value. This discrepancy arises because these papers considered firms with different pre-quota shares of women to be good counterfactuals to each other. In our data, we see that such firms grew differently already before the regulation, resulting in a negatively biased estimate of the effect. We overcome this bias by considering sharp increases that arise whenever percentage-based regulation applies to a small group of people. We further show that these large positive effects of female directors are not explained by increased risk-taking or changes in board characteristics, but rather by scaling down inefficient operations and empire-"demolishing".

Suggested Citation

  • Olga Kuzmina & Valentina Melentyeva, 2021. "Gender diversity in corporate boards: Evidence from quota-implied discontinuities," Working Papers w0282, New Economic School (NES).
    • Handle: RePEc:abo:neswpt:w0282
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    File URL: https://www.nes.ru/files/Preprints-resh/WP282.pdf
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    Cited by:

    1. B. Espen Eckbo & Knut Nygaard & Karin S. Thorburn, 2022. "Valuation Effects of Norway’s Board Gender-Quota Law Revisited," Management Science, INFORMS, vol. 68(6), pages 4112-4134, June.
    2. Mary Brooke Billings & April Klein & Yanting Crystal Shi, 2022. "Investors’ response to the #MeToo movement: does corporate culture matter?," Review of Accounting Studies, Springer, vol. 27(3), pages 897-937, September.
    3. Juan Dempere & Shahira Abdalla, 2023. "The Impact of Women’s Empowerment on the Corporate Environmental, Social, and Governance (ESG) Disclosure," Sustainability, MDPI, vol. 15(10), pages 1-18, May.

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    More about this item

    Keywords

    Gender diversity; gender quota; board of directors; firm performance;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General

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