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

Abstract

In 2017, “The Big Three” institutional investors launched campaigns to increase gender diversity on corporate boards. We estimate that their campaigns led firms to add at least 2.5 times as many female directors in 2019 as they had in 2016 and to promote female directors to key board positions. Firms increased female representation by relying less on managers’ existing networks to identify candidates and by placing less emphasis on candidates’ executive experience. Our results highlight index investors’ ability to influence firms’ governance structures and shareholder advocacy’s potential to expand women’s participation in corporate leadership more fully than government mandates.

Keywords: gender diversity, directors, institutional ownership, indexing

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