Board Gender Diversity Revisited: Evidence from Supply-Side Shocks in China

Abstract

This paper identifies a positive causal effect of board gender diversity on firm performance by exploiting unique historical supply-side shocks in China. Specifically, we construct novel instrumental variables for board gender diversity based on the Great Chinese Famine that exogenously widened the gender gap of the qualified directors of certain cohorts, primarily through the sex discrimination effect. Moreover, we find that board gender diversity is beneficial to firm performance through better corporate governance and operational efficiency. Our results highlight that historical events can influence labor market structure and firm performance decades later.

Keywords: Board Gender Diversity, Firm Performance, Supply-side Shock, China

JEL Classification: G34, J22