Public Attention to Gender Equality and Board Gender Diversity

Abstract

We document that heightened public attention to gender equality is associated with an increase in board gender diversity. Improvements in diversity are more pronounced in firms with a corporate culture that is already sympathetic to gender equality. When public attention to gender equality increases, firms reach out to a larger pool of women, such as women without industry experience or outside their network, but female director appointments do not appear to be dilutive of the board’s skills. Instead, we observe less reliance on connections for director appointments and a decrease in the propensity to appoint connected men.

Gender Diversity Goals, Supply Constraints, and the Market for Seasoned Female Directors: The U.S. Evidence

“…Their measure of gender attention (the Google Search Volume Index (SVI) for the term "gender equality") increases sharply post-2012, consistent with the observation that the drive for board gender diversity gathered momentum in the second-half of our sample period. Giannetti and Wang (2020) show that, after controlling for supply constraints, the gender ratio increases more for firms with ex ante cultural traits that are associated with more female-friendliness when the SVI is higher. In some respects, however, Giannetti and Wang's (2020) findings are seemingly at odds with our findings.…”

“…Our paper is closely related to two recent papers. Giannetti and Wang (2020) show that greater attention to gender equality leads to a higher ratio of female-to-male directors for quoted U.S. firms. Their measure of gender attention (the Google Search Volume Index (SVI) for the term "gender equality") increases sharply post-2012, consistent with the observation that the drive for board gender diversity gathered momentum in the second-half of our sample period.…”

“…Several other countries are considering similar legislation, sometimes limited to state-owned or mixed ownership companies, while others have set voluntary goals. 2 Giannetti and Wang (2020) find that the Google Search Volume Index for terms associated with gender equality increases sharply around 2012, suggesting a gradual increase in gender awareness that accelerated around this time.…”

“…The percentage of females on the boards of quoted firms (S&P 500 firms) increased from 6.9 percent (11.1 percent) in 2000 to 8.1 percent (14.6 percent) in 2009, and then to 14.5 percent (24.05 percent) in 2019. The acceleration in the post-2009 period likely reflects greater sensitivity towards gender diversity (Giannetti and Wang, 2020) and public pressure. 2 One interpretation of these developments is that public pressure is succeeding in removing prejudices against women and providing opportunities to qualified women who would otherwise be overlooked by nomination committees.…”

Cracks in the Boards: the Opportunity Cost of Governance Homogeneity

“…They either use a difference-in-differences strategy with a matched sample 5 or an instrumental variables strategy where the share of women in boards is instrumented with its past share interacted with a year fixed effect. 6 In both cases there is a risk that firm outcomes react to the composition of boards through the market's approval or disapproval of a new governance rather than through that board's change (see Giannetti and Wang (2021) for evidence on the relationship between high abnormal returns and high public attention to gender equality and Ferrari et al (2018) for the positive response of the market to the election of a female board member). 7 There is additional concern that the size of firms might be correlated with both the evolution of performance and the compliance to the quota.…”