Winds of Change: Gender Quota on Boards in the Face of Patriarchy

Abstract

We study the introduction of gender quotas in India, the first country with strong patriarchal views to mandate female directors on corporate boards. Despite small penalties, we find high compliance rates, resulting in a threefold expansion of the female director labor pool. After the reform, almost half of the firms appoint and retain female directors beyond the ambit of the quota, a change that is significantly weaker on boards with stronger patriarchal views. The better opportunities for females manifest in a higher likelihood of appointment on important subcommittees and in a reduction in the gender gap in director remuneration from 30% to 3%. Our results suggest that although gender quotas deepen and diversify the director pool, strong patriarchal views among incumbent directors hinder the transition to gender-diverse boards.

Keywords: Gender quota, Female directors, Board composition, Director quality

JEL Classification: G30 ; G34 ; J33 ; O16