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The Big Three and board gender diversity: The effectiveness of shareholder voice

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  • Gormley, Todd A.
  • Gupta, Vishal K.
  • Matsa, David A.
  • Mortal, Sandra C.
  • Yang, Lukai

Abstract

In 2017, “The Big Three” institutional investors launched campaigns to increase gender diversity on corporate boards. We estimate that their campaigns led American corporations to add at least 2.5 times as many female directors in 2019 as they had in 2016. Firms increased diversity by identifying candidates beyond managers’ existing networks and by placing less emphasis on candidates’ executive experience. Firms also promoted more female directors to key board positions, indicating firms’ responses went beyond tokenism. Our results highlight index investors’ ability to effectuate broad-based governance changes and the impact of investor buy-in in increasing corporate-leadership diversity.

Suggested Citation

  • Gormley, Todd A. & Gupta, Vishal K. & Matsa, David A. & Mortal, Sandra C. & Yang, Lukai, 2023. "The Big Three and board gender diversity: The effectiveness of shareholder voice," Journal of Financial Economics, Elsevier, vol. 149(2), pages 323-348.
    • Handle: RePEc:eee:jfinec:v:149:y:2023:i:2:p:323-348
    DOI: 10.1016/j.jfineco.2023.04.001
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    More about this item

    Keywords

    Gender diversity; Directors; Institutional ownership; Indexing;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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