The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice

54 Pages Posted: 25 Nov 2020 Last revised: 27 Nov 2020

See all articles by Todd A. Gormley

Todd A. Gormley

Washington University in St. Louis; European Corporate Governance Institute (ECGI)

Vishal K. Gupta

University of Alabama - Department of Management

David A. Matsa

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Sandra Mortal

University of Alabama - Culverhouse College of Commerce & Business Administration

Lukai Yang

University of Alabama

Date Written: November 26, 2020

Abstract

In 2017, “The Big Three” institutional investors (BlackRock, State Street, and Vanguard) launched campaigns to increase gender diversity on corporate boards. Using difference-in-differences estimation, we find that their campaigns led firms to add at least 2.5 times as many female directors in 2019 as they had in 2016 and increased a female director’s likelihood of holding a key board position, including chairperson of the nominating and audit committees. Evidence suggests that firms achieved these gains by relying less on their existing networks to identify qualified candidates and by placing less emphasis on candidates’ executive and board experience. Our results highlight the potential for shareholder advocacy to expand women’s participation in corporate leadership and index investors’ ability to influence firms’ governance structures.

Keywords: gender diversity, directors, institutional ownership, indexing

JEL Classification: D22, G23, G30, G34, G35

Suggested Citation

Gormley, Todd A. and Gupta, Vishal K. and Matsa, David A. and Mortal, Sandra and Yang, Lukai, The Big Three and Board Gender Diversity: The Effectiveness of Shareholder Voice (November 26, 2020). Available at SSRN: https://ssrn.com/abstract=3724653 or http://dx.doi.org/10.2139/ssrn.3724653

Todd A. Gormley (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
(314) 935-7171 (Phone)

HOME PAGE: http://www.gormley.info

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Vishal K. Gupta

University of Alabama - Department of Management ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

David A. Matsa

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8337 (Phone)
847-491-5719 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sandra Mortal

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States

Lukai Yang

University of Alabama ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

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