Where are the Women? Board Decisions and Female Director Location

40 Pages Posted: 31 Oct 2013

See all articles by Zinat S. Alam

Zinat S. Alam

University of North Texas, College of Business Administration, Department of Finance, Insurance Real Estate and Law

Mark A. Chen

Georgia State University - Robinson College of Business

Conrad S. Ciccotello

Daniels College of Business, University of Denver

Harley E. Ryan

Georgia State University - Department of Finance

Date Written: October 29, 2013

Abstract

Using the addresses of over 4,000 directors on the boards of S&P 1500 firms, we document that female board members tend to live closer to large metropolitan areas than do male board members. Nearly 53% of the female directors in our sample reside in five metropolitan areas. The combined statistical area of Washington DC/Baltimore/Arlington by itself accounts for nearly 21% of all female directors. In contrast, only 36% of male directors reside in the top five metropolitan areas. We hypothesize that this geographic clustering constrains the supply of qualified female board members who can be located close to corporate headquarters. Consistent with this hypothesis, we find that, in most regions of the U.S., women directors tend to reside farther than male directors from corporate headquarters. We also hypothesize that the differences in geographic distances from corporate headquarters will influence how female and male directors use information. To test this hypothesis, we examine whether director location and gender diversity affect board decision-making. We find that gender-diverse boards rely more heavily on stock price performance when determining CEO compensation and when deciding whether to dismiss the CEO. However, these effects largely disappear when we control for directors’ geographic distance from headquarters. Moreover, we find a positive stock price reaction to public announcements of female director appointments when these female directors are proximate to headquarters. We do not document a reaction to the appointment of distant female directors or male directors. Thus, the geographic remoteness of female directors, rather than gender-based differences in monitoring per se, can explain why gender-diverse boards are tougher monitors. More generally, our results suggest that it is important to consider local supply constraints created by geographic clustering when evaluating the effects of gender diversity on the operations of boards of directors.

Keywords: Board of Directors, Gender Diversity, Geography

JEL Classification: G30, G34, J16

Suggested Citation

Alam, Zinat S. and Chen, Mark A. and Ciccotello, Conrad S. and Ryan, Harley E., Where are the Women? Board Decisions and Female Director Location (October 29, 2013). Available at SSRN: https://ssrn.com/abstract=2347025 or http://dx.doi.org/10.2139/ssrn.2347025

Zinat S. Alam

University of North Texas, College of Business Administration, Department of Finance, Insurance Real Estate and Law ( email )

1155 Union Circle #305340
Denton, TX 76203
United States

Mark A. Chen

Georgia State University - Robinson College of Business ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Conrad S. Ciccotello

Daniels College of Business, University of Denver ( email )

2201 S. Gaylord St
Denver, CO 80208-2685
United States

Harley E. Ryan (Contact Author)

Georgia State University - Department of Finance ( email )

University Plaza
35 Broad Street, Suite 1221
Atlanta, GA 30303-3083
United States
404-651-2674 (Phone)
404-651-2630 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
76
Abstract Views
649
rank
360,214
PlumX Metrics