Board of Directors, Gender Diversity and Monitoring

Abstract

This paper aimed to investigate whether gender diversity in the board affects the effectiveness of monitoring in order to reduce the total and variable remuneration of executives, the practice of earnings management, and the sensitivity of CEO turnover to the performance of Brazilian companies. We analyzed 199 companies listed on B3 between 2011 and 2018. The results indicate that gender diversity on the board has a negative effect on the total and variable remuneration of executives, and the participation of 11% to 20% of women on the board has a negative effect on earnings management. Although it has no direct effect on the probability of CEO turnover, gender diversity takes away the explanatory power of the ROA. We understand that gender diversity on the board of directors improves the effectiveness of the monitoring functions investigated, although this is an overdue effect when other governance proxies are considered.