Women on Boards: Evidence from a French Reform Imposing a 40 Percent Gender Board Quota

Abstract

In 2010 the French government mandated a 40% gender quota on corporate boards to be met by January 2017. The policy raised the average female board share of publicly traded firms from 10.3% in 2009 to 43% in 2019. We examine the effects of this staggering increase, leveraging new data on 200 French publicly traded firms from 2006 to 2019. Newly appointed female board members are as qualified as their male counterparts and less likely to have any family connection with incumbent board members. Female board members are also accessing powerful positions within the boardroom (committee membership and chairmanship). We then assess how these changes in corporate board composition (i) impact the implementation of board prerogatives and (ii) influence gender imbalances within the firm. Using an IV strategy exploiting the fact that the 40% threshold was set exogenously by the government and a Difference-in-Differences strategy comparing firms differently exposed to the quota, we show that an increase in the share of female board members has impacts at the very top. Indeed, we observe changes in practices that are aligned with better governance, higher likelihood of having a female CEO, and increased female representation in the top management. Beyond the very top of the firms’ hierarchy, an increase in the female board share has no or even negative impact on gender wage or promotion gaps.

Keywords: Gender wage gap, Corporate governance, Discrimination

JEL Classification: J1, J3, J7, M3, G3