The under-representation of women on boards is a heavily discussed topic—not only in Germany. Based on critical mass theory and with the help of a hand-collected panel dataset of 151 listed German firms for the years 2000–2005, we explore whether the link between gender diversity and firm performance follows a U-shape. Controlling for reversed causality, we find evidence for gender diversity to at first negatively affect firm performance and—only after a “critical mass” of about 30 % women has been reached—to (...) be associated with higher firm performance than completely male boards. Given our sample firms, the critical mass of 30 % women translates into an absolute number of about three women on the board and hence supports recent studies on a corresponding “magic number” of women in the boardroom. (shrink)

Although the number of women in middle management has grown quite rapidly in the last two decades, the number of female CEOs in large corporations remains extremely low. This article examines many explanations for why women have not risen to the top, including lack of line experience, inadequate career opportunities, gender differences in linguistic styles and socialization, gender-based stereotypes, the old boy network at the top, and tokenism. Alternative explanations are also presented and analyzed, such as differences between female leadership (...) styles and the type of leadership style expected at the top of organizations, feminist explanations for the underrepresentation of women in top management positions, and the possibility that the most talented women in business often avoid corporate life in favor of entrepreneurial careers. (shrink)

We investigate whether female executives influence perceived employer attractiveness for female job seekers. Drawing on signaling theory, we argue that female members in top management may signal organizational justice and organizational support and may therefore enhance perceived employer attractiveness. Findings from a scenario experiment with 357 participants indicate that female job seekers are more attracted to an organization with a female executive holding a non-stereotypical office [such as Chief Financial Officer ] as compared to an organization with an all-male top (...) management. Results of a structural equation model show that perceived organizational justice mediates the positive effect of a female holding a non-stereotypical office on perceived employer attractiveness, but perceived organizational support does not. Our results challenge the widely held view that women in top management will generally help attract female job seekers; rather, they suggest that a single female executive holding a stereotypical female office even reduces perceived employer attractiveness. (shrink)

What critical characteristics do firms have that determine the scale and scope of corporate social responsibility activities they undertake? This paper examines two disparate predictors of corporate social performance. First, using the lens of the resource-based view, we examine the role of alliance network centrality on corporate social performance. We find that centrality enhances corporate social performance. Second, we investigate how board composition affects corporate social performance. Specifically, drawing on stakeholder theory, we find that the percentage of female directors predicts (...) greater corporate social performance. In addition, we look at the influence of outside directors on this relationship. Our findings show that the presence of more outside directors positively moderates the relationship between female directors and corporate social performance. (shrink)

The current literature shows great interest in the issue of gender diversity on boards of directors. Some studies have hypothesized a direct relationship between diversity and the value of the firm, but not many examine the intermediate mechanisms that may exert an influence on such relationships. We employ two stages of GMM estimation methodology to exhibit evidences of the relationship between gender diversity and compensation of top managers in the Spanish context. Results show that gender diversity positively affects the effectiveness (...) of boards—in terms of composition, structure, size and functioning—influencing a proper design of top managers compensation linked to company performance. Evidences suggest that legislative actions aimed at increasing the presence of women on boards of directors are justified not only for ethical reasons, but also for reasons of economic efficiency. (shrink)

Income inequality in the US has now reached levels not seen since the 1920s. Management, as a field of scholarly inquiry, has the potential to contribute in significant ways to our understanding of recent inequality trends. We review and assess recent research, both in the management literature and in other fields. We then delineate a conceptual framework that highlights the mechanisms through which business practice may be linked to income inequality. We then outline four general areas in which management scholars (...) are uniquely positioned to contribute to ongoing research: data and description, organizational dynamics, collective action, and value flows and tradeoffs. To stimulate future research, we highlight a number of relevant research questions and link these questions to existing management research streams that could be leveraged to address them. (shrink)

We evaluate the relationship between the appointment of women to CEO or Chair positions and firm performance, and shed light on the differences between family and nonfamily firms. By using a propensity score matching approach on a sample of 394 French firms over the period 2001–2010, we find major discordances between women’s leadership style and family business expectations relative to firm performance, as measured by return on assets and Tobin’s q. Notably, our results support the conjecture that family firms, which (...) are more conducive to transformational leadership, offer women a more appropriate climate for exercising the function of Chair than that of CEO. In contrast, women CEOs perform better in nonfamily firms. Our findings move away from the predominant focus on barriers and stereotypes images about the female leadership and support the contingency theory of leadership, which states that the effectiveness of a leadership style depends on the organization and culture in which leaders operate, and on task-related positions. (shrink)

We examine the association between gender-diverse compensation committees and CEO pay and find that CEO compensation levels are negatively associated with gender-diversity of the compensation committee, but not gender-diversity of the board. Furthermore, we find that excess CEO compensation is negatively related to subsequent return on assets for firms with an all-male compensation committee but not for firms with a gender-diverse compensation committee. These results suggest that CEOs do receive some level of excess compensation which can be mitigated by having (...) one or more females on the compensation committee. (shrink)

Given that women CEOs are usually more risk averse, engage less in opportunistic behavior, and provide higher quality earnings than men CEOs, we argue that firms with women CEOs are likely to face lower operational and information risk and thus enjoy cheaper external funds. Using a large sample of Chinese A-share listed firms operating from 2006 to 2012, we find consistent evidence that Chinese banks tend to impose lower loan costs on firms with women CEOs compared to firms with men (...) CEOs. This effect is more pronounced for non-state-owned enterprises than for state-owned enterprises, for firms without political connections than for firms with political connections, and during non-crisis periods. We do not find any significant effects for firms with women chairpersons, CFOs, or directors. (shrink)

What, if anything, is wrong with high executive compensation? Is the common “lay reaction” of indignation and moral outrage justified? In this paper, my main goal is to articulate in a more systematic and philosophical manner the egalitarian responses to these questions. In order to do so, I suggest that we take some insights from recent debates on two versions of egalitarianism: a distributive one, according to which no one should be worse off than others because of unfair distributions of (...) goods and resources, especially ones based on matters of luck or arbitrary factors, and a relational one, which maintains that egalitarian justice requires members of a society to relate to one another as equals. Drawing on recent attempts to highlight the tricky nature of managerial authority, I argue that high inequalities in pay are not simply a distributional matter but should also be analyzed through a relational lens. I also attempt to show that relational egalitarians are well-equipped to question the now dominant “incentives” view of CEO compensation. (shrink)

Increasing gender diversity in the boardroom has been promoted as a way to enhance corporate governance and risk management. This study empirically examines whether boards with more female directors play a role in reducing R&D risk. We first show that female directors help to reduce the positive relationship between R&D investment and future performance volatility. We then report that firms with more gender-diverse boards exhibit a lower adverse effect of R&D on the cost of debt. These results are robust to (...) endogeneity analysis, alternative measures of gender diversity and risky investment, and other sensitivity tests. Overall, our results suggest that female directors improve board effectiveness in risk management with respect to R&D investment. (shrink)

Issues of social justice underlie the clamour for greater gender balance in top-management. The present study reveals that pursuit of such social justice is also value-enhancing in relation to the longer-run performance of initial public offerings stocks, especially where female board members are unencumbered by family-connection with other directors. This study examines the economic benefits of board gender diversity for state- and privately controlled firms in the Hong Kong IPO market. Gender board diversity is much less common in state-run IPO (...) firms. Within the subset of privately controlled IPO firms, distinction exists between entities that accommodate family-connected board officers and those that do not. Specifically, this study focuses on family-ties between board members. This issue allows for finer-grained assessment of family influence on firm performance. Stronger post-listing stock, return-on-assets and sales-on-assets performance arise in privately controlled firms without family-connected board members and in state-run entities. Gender diversity thus serves as a positive, but only when female director presence is untrammelled by family associations between directors. However, there is little evidence of a link between female board representation and IPO underpricing. Relative to state-backed issuers, privately controlled firm boards accommodate more women, younger officers and a broader mix of nationalities, but appear more-inclined to unify CEO and chair positions. Board duality, the fraction of independent directors and directors’ age and nationality exhibit little relation with initial and aftermarket stock returns. In prescriptive terms, minority investors gain from the inclusion of female directors, especially when IPO firm directors are unencumbered by family-affiliation with other board members. Results therefore add to the clarion of calls for greater female board presence. (shrink)

Does a board with greater gender diversity make better investment decisions? Drawing on Austrian economic cycle theory and work groups theory, we argue that such board openness will help male board members to overcome gender biases, discrimination, and conflicts; integrate different perspectives under the economic cycle and crisis; and foster an environment in which better decisions are made. The results of an empirical study of 14,609 firm-quarter observations from 1,555 listed firms in China between 2007 and 2009 strongly support our (...) arguments. We find that a Chinese board is more likely to accept female directorship during an economic crisis than during an economic prosperity stage. Boards with greater gender diversity are more likely to make tough, counter-cyclical investments to improve firm performance during a crisis. Our study enriches the board decision-making literature by exploring the impacts of board gender diversity on firm performance within the context of an economic crisis. The results of our study also carry significant managerial implications for overcoming gender stereotypes, biases, and prejudices on a board. (shrink)

What signals do firms in emerging economies send to stakeholders when they adopt corporate social responsibility practices? We argue that in emerging economies, firms that adopt CSR practices positively signal investors that their firms have superior capabilities for filling institutional voids. From an institution-based view, we hypothesize that the institutional environment moderates the signaling effect of CSR on a firm’s financial performance. Based on a sample of firms from ten Asian emerging economies, we find a positive relationship between CSR practices (...) and financial performance. This positive relationship is stronger in the less developed capital market than in the more developed one. The financial benefits of CSR practices are also more salient in the low information diffusion market than in the high one. We emphasize that signaling theory and the institution-based view can jointly contribute to the CSR literature. (shrink)

We examine whether sex discrimination contributes to the underrepresentation of female executives in large corporations. China’s strong cultural preference for sons has made newborn boys greatly outnumber newborn girls. Using the male-to-female sex ratio at birth as the proxy for discrimination against women, we find that firms headquartered in more discriminatory areas hire fewer female executives. Even conditional on a woman reaching an executive position, she faces a higher likelihood of dismissal and receives lower compensation than her male counterparts. Overall, (...) our findings suggest that sex discrimination plays an important role in preventing women from climbing the corporate ladder. (shrink)

This paper examines whether bank capital ratios and default risk are associated with the gender of the bank’s Chief Executive Officer and Chairperson of the board. Given the documented gender-based differences in conservatism and risk tolerance, we postulate that female CEOs and board Chairs should assess risks more conservatively, and thereby hold higher levels of equity capital and reduce the likelihood of bank failure during periods of market stress. Using a large panel of U.S. commercial banks, we document that banks (...) with female CEOs hold more conservative levels of capital after controlling for the bank’s asset risk and other attributes. Furthermore, while neither CEO nor Chair gender is related to bank failure in general, we find strong evidence that smaller banks with female CEOs and board Chairs were less likely to fail during the financial crisis. Overall, our findings are consistent with the view that gender-based behavioral differences may affect corporate decisions. (shrink)