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.