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

56 Pages Posted: 18 Mar 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: January 1, 2021

Abstract

Using data across European corporate boards, we investigate the effects of quota-induced female representation on firm value and operations, under minimal identification assumptions. We consider sharp increases in the share of women on boards that arise due to rounding whenever percentage-based regulation applies to a small group of people. We find that having more women on corporate boards has large positive effects on Tobin´s Q and buy-and-hold returns. This result is in stark contrast with previous empirical work that finds large negative effects. The reason for this discrepancy is that 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 had grown differently already before the regulation. Thus, assuming they are good comparables would result in a negatively biased estimate of the effect. Instead, we use quasi-random assignment induced by rounding and find that promoting gender equality is aligned with shareholder interests. This positive effect is not explained by increased risk-taking or changes in board composition, but rather by scaling down inefficient operations and empire-“demolishing“.

Keywords: Gender diversity, women on boards, gender quota, performance

JEL Classification: J16, G34, G38, D22

Suggested Citation

Kuzmina, Olga and Melentyeva, Valentina, Gender Diversity in Corporate Boards: Evidence From Quota-Implied Discontinuities (January 1, 2021). ZEW - Centre for European Economic Research Discussion Paper No. 21-023, 2021, Available at SSRN: https://ssrn.com/abstract=3805617. or http://dx.doi.org/10.2139/ssrn.3805617

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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