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How do female directors improve board governance? A mechanism based on norm changes

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  • Srinidhi, Bin
  • Sun, Ye
  • Zhang, Hao
  • Chen, Shiqiang

Abstract

Prior literature documents that corporate boards with female directors produce better governance outcomes than all-male boards. However, female directors constitute the minority on most boards, which precludes majority voting as the mechanism through which they change board decisions. We identify changing the norms of how the board works as this mechanism. Using the market for norms framework, we explain how female directors are effective even without possessing a board majority or other sources of symbolic power, such as hierarchical authority and social gravitas. Empirically, we show that independent female directors, compared to their male counterparts, are more effective at changing board norms (board processes) and improving governance (board outputs).

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  • Srinidhi, Bin & Sun, Ye & Zhang, Hao & Chen, Shiqiang, 2020. "How do female directors improve board governance? A mechanism based on norm changes," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(1).
    • Handle: RePEc:eee:jocaae:v:16:y:2020:i:1:s1815566919301213
    DOI: 10.1016/j.jcae.2019.100181
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    References listed on IDEAS

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    1. Bin Srinidhi & Ferdinand A. Gul & Judy Tsui, 2011. "Female Directors and Earnings Quality," Contemporary Accounting Research, John Wiley & Sons, vol. 28(5), pages 1610-1644, December.
    2. Kevin Campbell & Antonio Mínguez-Vera, 2008. "Gender Diversity in the Boardroom and Firm Financial Performance," Journal of Business Ethics, Springer, vol. 83(3), pages 435-451, December.
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    4. Posner, Eric A, 1998. "Symbols, Signals, and Social Norms in Politics and the Law," The Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 765-798, June.
    5. Gul, Ferdinand A. & Srinidhi, Bin & Ng, Anthony C., 2011. "Does board gender diversity improve the informativeness of stock prices?," Journal of Accounting and Economics, Elsevier, vol. 51(3), pages 314-338, April.
    6. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    7. Ellickson, Robert C, 1998. "Law and Economics Discovers Social Norms," The Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 537-552, June.
    8. David A. Carter & Betty J. Simkins & W. Gary Simpson, 2003. "Corporate Governance, Board Diversity, and Firm Value," The Financial Review, Eastern Finance Association, vol. 38(1), pages 33-53, February.
    9. Caspar Rose, 2007. "Does female board representation influence firm performance? The Danish evidence," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 404-413, March.
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    2. Ingrid-Mihaela Dragotă & Andreea Curmei-Semenescu & Raluca Moscu, 2020. "CEO Diversity, Political Influences, and CEO Turnover in Unstable Environments: The Romanian Case," JRFM, MDPI, vol. 13(3), pages 1-22, March.
    3. Voicu D. Dragomir, 2022. "Comparative Evidence on Corporate Governance Outcomes in the G20 Countries," World, MDPI, vol. 3(4), pages 1-16, December.
    4. Dobija, Dorota & Hryckiewicz, Aneta & Zaman, Mahbub & Puławska, Karolina, 2022. "Critical mass and voice: Board gender diversity and financial reporting quality," European Management Journal, Elsevier, vol. 40(1), pages 29-44.
    5. Obi Berko O. Damoah & Yvonne Ayerki Lamptey & Alex Anlesinya & Barbara Naa Amanuah Tetteh, 2025. "Gendering Corporate Boards and Conditional Effectiveness of Board Processes: Insights from a Sub-Saharan African Country," Global Business Review, International Management Institute, vol. 26(6), pages 1716-1733, December.
    6. Wang, Zhenjie & Yang, Yi & Zhang, Jiewei, 2024. "Are female directors more inclined to avoid risks?," International Review of Financial Analysis, Elsevier, vol. 92(C).
    7. Padilla Angulo, Laura & Ben Slimane, Faten, 2025. "Women directors on traditionally male-dominated stock exchange boards: can they make a difference?," Journal of Business Research, Elsevier, vol. 200(C).
    8. Johan Hadisurya & Joni Joni & Tan Kwang En & Sinta Setiana, 2025. "How ESG and Gender Diversity Affect Firm Performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3181-3192, May.
    9. Pamela Kent & Richard Kent & Robyn McCormack & Julie‐Anne Tarr, 2023. "Disclosure of liquidity and cash flow statements by Australian superannuation funds before Covid‐19," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2653-2675, June.
    10. Ismaanzira Ismail*, 2025. "Political Connection Firms, Female Directors and the Appointment of Female Executives: Evidence from an Emerging Country," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(5), pages 2958-2977, May.
    11. Bona-Sánchez, Carolina & Fleitas-Castillo, Gema C. & Pérez-Alemán, Jerónimo & Santana-Martín, Domingo J., 2024. "Gender diversity and audit fees: Insights from a principal-principal agency conflict setting," International Review of Financial Analysis, Elsevier, vol. 96(PA).

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