Role of Old Boys' Networks and Regulatory Approaches in Selection Processes for Female Directors
Forthcoming in the British Journal of Management
57 Pages Posted: 10 Mar 2021
Date Written: January 15, 2021
This study examines the influence of directors' and CEOs' networks in the appointment of female directors. Building on social identity theory and social network theory, we argue that since men and women are members of different networks, recruitment practices based on networks prevent women from accessing board positions. We also examine the role of board gender diversity regulation on the influence of networks, hypothesising that such regulations help in deinstitutionalising ‘old boys' networks’, based on institutional theory. Using a sample of 32,819 new board appointments in the largest listed firms of 17 European countries, the US, and Canada, we determine whether new directors are directly linked through employment, board, charities, or club memberships, to the incumbent directors or the CEO. We find that the probability that the new director appointed is a woman decreases by approximately 28% when the new director is associated with one of the incumbent directors. We also find that gender diversity regulation reduces the influence of networks in the appointment of female directors. Our results provide archival evidence that board networks hinder the recruitment of female directors and that gender diversity hard and soft laws deinstitutionalise old boys' networks.
Keywords: Corporate governance. Social networks, Boards of Directors, Women on boards, Regulation, Gender diversity
JEL Classification: M12
Suggested Citation: Suggested Citation