Gender Diversity in Corporate Boards: Evidence from Quota-Implied Discontinuities

57 Pages Posted: 29 Jun 2020 Last revised: 11 Feb 2021

See all articles by Olga Kuzmina

Olga Kuzmina

New Economic School (NES); London School of Economics & Political Science (LSE) - Department of Finance; Centre for Economic Policy Research (CEPR)

Valentina Melentyeva

ZEW – Leibniz Centre for European Economic Research; University of Mannheim

Multiple version iconThere are 4 versions of this paper

Date Written: June 2020

Abstract

Using data across European corporate boards, we investigate the effects of quota-induced female representation on firm value and operations. We use quasi-random assignment induced by rounding and find that promoting gender equality is aligned with shareholder interests. This result is in stark contrast with previous work finding large negative effects of women on firm value. This discrepancy arises because these papers considered firms with different pre-quota shares of women to be good counterfactuals to each other. In our data, we see that such firms grew differently already before the regulation, resulting in a negatively biased estimate of the effect. We overcome this bias by considering sharp increases that arise whenever percentage-based regulation applies to a small group of people. We further show that these large positive effects of female directors are not explained by increased risk-taking or changes in board characteristics, but rather by scaling down inefficient operations and empire-"demolishing".

JEL Classification: D22, G32, J16

Suggested Citation

Kuzmina, Olga and Melentyeva, Valentina, Gender Diversity in Corporate Boards: Evidence from Quota-Implied Discontinuities (June 2020). CEPR Discussion Paper No. DP14942, Available at SSRN: https://ssrn.com/abstract=3638047

Olga Kuzmina (Contact Author)

New Economic School (NES) ( email )

45 Skolkovskoe shosse
Moscow, Moscow 121353
Russia

HOME PAGE: http://pages.nes.ru/okuzmina/

London School of Economics & Political Science (LSE) - Department of Finance ( email )

United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Valentina Melentyeva

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

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