Working Paper: NBER ID: w30657
Authors: Todd A. Gormley; Vishal K. Gupta; David A. Matsa; Sandra C. Mortal; Lukai Yang
Abstract: In 2017, “The Big Three” institutional investors launched campaigns to increase gender diversity on corporate boards. We estimate that their campaigns led American corporations to add at least 2.5 times as many female directors in 2019 as they had in 2016. Firms increased diversity by identifying candidates beyond managers’ existing networks and by placing less emphasis on candidates’ executive experience. Firms also promoted more female directors to key board positions, indicating firms’ responses went beyond tokenism. Our results highlight index investors’ ability to effectuate broad-based governance changes and the important impact of investor buy-in in increasing corporate-leadership diversity.
Keywords: board diversity; gender diversity; institutional investors; shareholder advocacy
JEL Codes: G34; J71; M12; M14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| big three ownership (G32) | increase in female directorships (G34) |
| big three ownership (G32) | overall proportion of female directors (J21) |
| big three campaigns (H56) | increase in female director appointments (G34) |
| big three campaigns (H56) | reduction in female director departures (J63) |
| big three campaigns (H56) | addition of first-time female directors (J16) |
| big three ownership (G32) | likelihood of female directors chairing committees (G34) |
| big three campaigns (H56) | increase in female director share (G34) |