Women on Corporate Boards: A High Dimensional Analysis

Abstract

This study seeks to identify the most important company characteristics associated with board gender diversity, rank their relative importance, and estimate their practical relevance. Using novel tools from explainable AI we analyze 36 firm, board, and corporate culture characteristics as predictors of board gender diversity. The methodological approach allows reliable ranking of the characteristics, which takes into account all the interactions. We find that the most important characteristics are the home state, size, and riskiness of a company; the number of other board memberships and tenure of its board members; and its inclusive/diverse culture. The firm characteristics are the most important factors connected to board gender diversity, followed by the board characteristics. Our analysis reveals novel nonlinear patterns and relationships between the company characteristics and board gender diversity. Of the cultural characteristics of a company, the factors related to equality values have a strong positive connection to board gender diversity. The results offer a springboard for other researchers to advance theories and develop new hypotheses using more interpretable models, and decision-makers insight into which characteristics truly matter and how.

Keywords: Corporate governance, Board gender diversity, Corporate culture, Machine learning, Explainable AI, Social media