The departure dilemma: Directors’ last working year and firm performance—Do gender differences matter?

Keeping in mind the importance of pre-quitting behaviors, this study attempts to investigate the impact of directors’ last working year on firm performance. Analyzing a sample of Chinese listed firms over the period of 2003 to 2018, we find that corporate boards with more directors who are in their last working year are negatively related to firm performance. We argue that this negative relationship may be due to the negative behavior and less commitment that people show when they plan to quit their jobs. Furthermore, we discovered that gender differences play a significant role. We show that in gender-diverse boards, the negative relationship between directors’ last working year and firm performance is less severe. Our findings are robust since we address the endogeneity issue and employ several robustness checks. Our findings highlight new insights and provide an opportunity for policymakers and governance committees to constitute a more balanced board by minimizing the ratio of last-year directors and including more female directors.