Female representation on boards andCEOperformance‐induced turnover: Evidence from Russia

Abstract

Research Question/Issue: This study examines the influence of female board representation on CEO turnover and firm value. We focus on Russia, a patriarchal country with vast gender differences, where empathy, patience, and supportiveness are considered fundamental qualities of females. Research Findings/Insights: Using a sample of public firms listed on the MoscowExchange from 2006 to 2015, we find that female representation on boards is associated with lower CEO turnover-performance sensitivity. Further, female boards appear to add firm value, as we find that CEO retention decisions are associated with improved future firm value when the decision is made by a female board. Furthermore, we identify that female representation on boards is associated with greater diligence (i.e., hold more board meetings) after retaining their underperforming CEOs.Theoretical/Academic Implications: Our findings suggest that female boards tend to develop a long-term view of CEO performance and that such boards exercise greater diligence and supportiveness, thereby adding shareholder value. Our results also indicate that patience and collaboration of corporate boards afford opportunities to develop strategic thinking, which is particularly valuable for a firm in times of crisis.Our study contributes to the research on what qualities of a board affect its decision making and effectiveness. Our research also adds to the literature on female board representation. We study Russia, where gender differences are prominent, and female representation occurs by happenstance rather than regulatorily / intentionally. Overall, we are able to attribute our findings to female representation on boards.Practitioner/Policy Implications: Our study contributes to the burgeoning research on corporate governance in Russia. Although the Russian economy has demonstrated unprecedented growth among emerging markets, research on corporate governance in Russia remains scarce. Our study is among the first efforts to understand how female boards perform in a patriarchal country. Our investigation, therefore, offers important insights for policymakers and practitioners. K E Y W O R D S board composition, board task effectiveness, corporate governance, Russia

Boards of directors in BRIC countries: A review of empirical studies

“…In addition, T. Ahsan with coauthors show that board gender diversity smooths the influence of economic policy uncertainty on sustainable growth [Ahsan et al, 2021]. As a result, female directors in BRIC positively impact book and market performance [Berezinets, Ilina, Cherkasskaya, 2017;Horak, Cui, 2017;Kim, Qin, Kuang, 2020;Muravyev, 2017;Garanina, Muravyev, 2020].…”

“…A possible reason for the ambiguous results can be the difficulties of measuring truly independent directors [Hwang, Kim, 2009; Crespí- widely used is the proportion of female directors [Berezinets, Ilina, Cherkasskaya, 2017;Chauhan, Dey, 2017;Muravyev, 2017;Usman et al, 2020]. Some authors [Horak, Cui, 2017;Kim, Qin, Kuang, 2020;Mukarram, Ajmal, Saeed, 2018;Srivastava, Das, Pattanayak, 2018;Garanina, Muravyev, 2020] use a dummy variable that equals one if at least one woman is included on board. Kim, Qin, Kuang also test the total number of women on board [Kim, Qin, Kuang, 2020].…”

“…Some authors [Horak, Cui, 2017;Kim, Qin, Kuang, 2020;Mukarram, Ajmal, Saeed, 2018;Srivastava, Das, Pattanayak, 2018;Garanina, Muravyev, 2020] use a dummy variable that equals one if at least one woman is included on board. Kim, Qin, Kuang also test the total number of women on board [Kim, Qin, Kuang, 2020]. T. Garanina and A. Muravyev use a set of dummy variables equal to one if at least 1, 2, 3, or 4 women are included on a board [Garanina, Muravyev, 2020].…”

Publishing corporate governance research during a pandemic

“…Of course, a focal point of investigation is the board of directors. The impact of board gender diversity on firm decision making remains a topical issue (Kim et al, 2020;Nadeem, 2020), but Volume 28 also contains studies that examine other director and board characteristics. For example, Oradi et al (2020) investigate the relationship between CEOs' financial background and their firms' internal control weaknesses.…”

Network connections within committees and board governance effectiveness

“…More recently, researchers move on to more sophisticated aspects of board structure and its interaction with the management team. Studies show that board diversity (Adams & Ferreira, 2009; Carter et al, 2010; Cumming & Leung, 2021; Kim et al, 2020), industry expertise (Güner et al, 2008; Wang et al, 2015), and co‐option with the CEO (Banerjee et al, 2019; Coles et al, 2015) all play important roles in the board governance. Our paper is most related to a new strand of studies that examines how social connections within firm top hierarchy affect corporate governance.…”