Working Paper: CEPR ID: DP15257
Authors: Patricia Boyallian; Sudipto Dasgupta; Swarnodeep Homroy
Abstract: We show that over the last decade, growing public pressure for board gender diversity and awareness of gender equality issues in the U.S. has manifested in “seasoned” female board members accumulating multiple board appointments at a rate faster than seasoned male directors. The larger firms have been the most active in attracting seasoned female directors, at the expense of the smaller firms. This has likely contributed to the smaller firms lagging behind the larger firms in the pursuit of more gender balance. Our evidence is highly consistent with “supply constraints”, as reflected in high costs of recruiting first-time female directors, which the larger firms manage to avoid and the smaller firms find too costly to incur. Gender quota mandates are likely to expose the smaller firms even more to these costs; however, the absence of mandates may also not be optimal. Given growing public pressure, it may be necessary to mandate that larger firms maintain the ratio of first-time to seasoned female appointments above some level.
Keywords: Board Gender Diversity; Gender Quota; Supply Constraints; Labor Market for Directors
JEL Codes: G34; J16; G38; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| supply constraints (D10) | appointment dynamics of female directors (G34) |
| larger firms (L25) | attract seasoned female directors (J79) |
| smaller firms (L25) | higher search costs for first-time female directors (J16) |
| public pressure for board gender diversity (G34) | seasoned female directors accumulating board appointments faster (G34) |
| absence of gender quotas (J16) | not optimal for gender diversity (J16) |
| larger firms (L25) | avoid costs associated with recruiting first-time female candidates (J79) |
| gender quota mandates (J16) | burden smaller firms with costs (D21) |
| larger firms should be mandated (L25) | maintain a ratio of first-time to seasoned female appointments (J29) |