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Do ‘soft law’ board gender quotas work? Evidence from a natural experiment

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  • Mateos de Cabo, Ruth
  • Terjesen, Siri
  • Escot, Lorenzo
  • Gimeno, Ricardo

Abstract

In a new era of “open governance”, in which societal and corporate change is taking place, 15 predominantly European countries, including Spain, enacted board gender quotas to increase the share of women on boards. In this paper, we explore the effectiveness of the European Union’s first “soft” quota – the 2007 Spanish Gender Equality Act recommending all large public and private Spanish firms to appoint a target of 40 percent of each gender to serve as board directors by 2015. The Act provides an incentive in that quota compliant firms may receive a preference for the tendering of public contracts. We draw on institutional and resource dependency theories to motivate the first empirical test of a “soft” quota which is distinct from Norway’s “hard law” board gender quota, and more similar to the proposed EU-wide quota. Using a large novel panel of 767 Spanish firms and 2786 firm-year observations from 2005 to 2014, we exploit the Spanish Act as a natural experiment and employ a difference-in-differences model. We find that less than nine percent of targeted firms fully comply with the quota. Firms that depend on public contracts are significantly more likely to increase female representation, although quota compliant firms do not actually benefit from the Act’s potential incentive. The results highlight the Spanish government’s lack of commitment to the quota, and that the quota’s normative obligations did not trigger the adoption of gender-balanced boards.

Suggested Citation

  • Mateos de Cabo, Ruth & Terjesen, Siri & Escot, Lorenzo & Gimeno, Ricardo, 2019. "Do ‘soft law’ board gender quotas work? Evidence from a natural experiment," European Management Journal, Elsevier, vol. 37(5), pages 611-624.
    • Handle: RePEc:eee:eurman:v:37:y:2019:i:5:p:611-624
    DOI: 10.1016/j.emj.2019.01.004
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    Cited by:

    1. Kalyani Mulchandani & Ketan Mulchandani & Sahil Singh Jasrotia, 2021. "Does gender diversity on firm’s board affect dividend payouts? Evidence from India," Future Business Journal, Springer, vol. 7(1), pages 1-11, December.
    2. Paola Profeta & Giacomo Pasini & Valeria Maggian & Ludovica Spinola, 2023. "The gender composition of supervisor-worker dyads: Career blocks and gender pay gap," French Stata Users' Group Meetings 2023 17, Stata Users Group.
    3. Gagandeep Singh, 2020. "Corporate Governance: An Insight into the Imposition and Implementation of Gender Diversity on Indian Boards," Indian Journal of Corporate Governance, , vol. 13(1), pages 99-110, June.
    4. Joanna Tyrowicz & Siri Terjesen & Jakub Mazurek, 2017. "All on board? New evidence on board gender diversity from a large panel of firms," GRAPE Working Papers 5, GRAPE Group for Research in Applied Economics.
    5. Laufey Axelsdóttir & Þorgerður J. Einarsdóttir & Guðbjörg Linda Rafnsdóttir, 2023. "Justice and utility: Approval of gender quotas to increase gender balance in top‐level managements—lessons from Iceland," Gender, Work and Organization, Wiley Blackwell, vol. 30(4), pages 1218-1235, July.
    6. Fernández-Méndez, Carlos & Pathan, Shams, 2023. "The valuation impact of gender quotas in the boardroom: Evidence from the European markets," Finance Research Letters, Elsevier, vol. 54(C).

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    More about this item

    Keywords

    Corporate governance; Board diversity; Gender quotas; Public contracts; Soft quota;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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