Community Values, Female Board Representation, and Firm Performance: The Role of Religion and Politics

Abstract

We investigate the effect of the community values surrounding a firm’s headquarters on the percentage of women on a firm’s board of directors. We use religiosity and political affiliation measures to capture the values associated with the community norms. We find that firms headquartered in counties with lower religiosity and a lower percentage of Republican voters are more likely to have a greater number of female board members. Furthermore, firms with more female directors located in more Republican cities or more religious cities are more likely to have lower valuations, as measured by Tobin’s Q and the market-to-book ratio. These results have implications for corporate culture and the supply of female directors.

Keywords: Gender Board Diversity, Social Capital, Religion, Politics, Firm Performance

JEL Classification: G30, M14