Female Representation on Boards and CEO Performance‐induced Turnover: Evidence from Russia

Abstract

This study examines the influence of female board representation on CEO turnover and firm value. We focus on Russia, a patriarchal country with vast gender differences, where empathy, patience, and supportiveness are considered fundamental qualities of females. Using a sample of public firms listed on the Moscow Exchange from 2006 to 2015, we find that female representation on boards is associated with lower CEO turnover–performance sensitivity. Further, female boards appear to add firm value, as we find that CEO retention decisions are associated with improved future firm value when the decision is made by a female board. Furthermore, we identify that female representation on boards is associated with greater diligence (i.e., hold more board meetings) after retaining their underperforming CEOs. Our findings suggest that female boards tend to develop a long‐term view of CEO performance, and that such boards exercise greater diligence and supportiveness, thereby adding shareholder value. Our study contributes to the research on what qualities of a board affect its decision making and effectiveness. We study Russia, where gender differences are prominent, and female representation occurs by happenstance rather than regulatorily intentionally. Our study contributes to the burgeoning research on corporate governance in Russia. Although the Russian economy has demonstrated unprecedented growth among emerging markets, research on corporate governance in Russia remains scarce. Our study is among the first efforts to understand how female boards perform in a patriarchal country. Our investigation, therefore, offers important insights for policymakers and practitioners.

Keywords: Corporate Governance, Board Composition, Board Task Effectiveness, Russia

JEL Classification: G34, J64, M40, M50