Cracks in the Boards: The Opportunity Cost of Homogeneous Boards of Directors

34 Pages Posted: 26 Jul 2019

See all articles by Helene Maghin

Helene Maghin

KU Leuven - Department of Economics; SciencesPo - LIEPP - Laboratory for Interdisciplinary Evaluation of Public Policies; Université Paris VI Pierre et Marie Curie - College de France

Date Written: July 24, 2019

Abstract

Boards of directors' composition is closely related to firm inputs, output and financial returns. This paper uses the announcement and implementation of quotas in France as a quasi-experiment to test the effect of a shock on their composition. It moves beyond previous studies by establishing a clear causal link between governance change and firm total factor productivity (TFP) growth. It further contributes to the literature by disentangling between adjustment costs and benefits from new board members. The initial decline followed by a rise of the growth rate of TFP above pre-quota levels points to the positive impact of constrained change. It reflects the opportunity cost of homogeneous boards of directors for firms and the economy at large.

Keywords: gender, productivity

Suggested Citation

Maghin, Helene, Cracks in the Boards: The Opportunity Cost of Homogeneous Boards of Directors (July 24, 2019). Available at SSRN: https://ssrn.com/abstract=3426192

Helene Maghin (Contact Author)

KU Leuven - Department of Economics ( email )

Leuven, B-3000
Belgium

SciencesPo - LIEPP - Laboratory for Interdisciplinary Evaluation of Public Policies ( email )

27, rue Saint-Guillaume
Paris
France

Université Paris VI Pierre et Marie Curie - College de France ( email )

11 Place Marcellin Berthelot
Paris, 75005
France

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