Hostname: page-component-76fb5796d-vfjqv Total loading time: 0 Render date: 2024-04-25T13:23:25.437Z Has data issue: false hasContentIssue false
  • English
  • Français

Gender and Board Activeness: The Role of a Critical Mass

Published online by Cambridge University Press:  23 March 2017

Miriam Schwartz-Ziv
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This study analyzes detailed minutes of board meetings of business companies in which the Israeli government holds a substantial equity interest. Boards with at least 3 directors of each gender are found to be at least 79% more active at board meetings than those without such representation. This phenomenon is driven by women directors in particular; they are more active when a critical mass of at least 3 women is in attendance. Gender-balanced boards are also more likely to replace underperforming chief executive officers (CEOs) and are particularly active during periods when CEOs are being replaced.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 52 , Issue 2 , April 2017 , pp. 751 - 780
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2017 

Footnotes

1

I am deeply grateful to Eugene Kandel and Michael Weisbach (co-advisors of my Hebrew University doctoral dissertation, upon which this paper is based) for their continuing guidance and support. In addition, I thank the employees of Israel’s Government Companies Authority, who allowed me to conduct research, as well as the companies studied, which kindly provided me with private and sensitive data. I also owe a debt of gratitude to the following people who shared their thoughts with me and gave me advice: participants in the 2013 American Economic Association Conference, 2014 American Finance Association Conference, and 2014 Ackerman Conference on Corporate Governance and seminar participants at Baruch College, the Brandeis University doctoral seminar, the Harvard doctoral seminar, the Hebrew University of Jerusalem, the Interdisciplinary Center Herzliya, Michigan State University, the MIT doctoral seminar, the Mossavar-Rahmani Center at Harvard Kennedy School, Northeastern University, the Political Economy Workshop at Harvard, the Program on Corporate Governance at Harvard Law School, University of Toronto, Simmons College, Stony Brook University, Tel-Aviv University, the University of California Riverside, Virginia Tech, Washington University of Saint Louis, the Women and Public Policy Program at Harvard Kennedy School, and Yeshiva University. I also thank Renée Adams, Bo Becker, Shai Bernstein, Iris Bohnet, Constantine Boussalis, Travis Coan, Lauren Cohen, Martijn Cremers, Andrew Ellul, Mara Faccio (the referee), Robin Greenwood, Boris Groysberg, Jarrad Harford (the editor), Victoria Ivashina, Dirk Jenter, Natalia Karelaia, Saul Lach, Lubomir Litov, Evgeny Lyandres, Nadya Malenko, Amalia Miller, Johanna Mollerstrom, Udi Nisan, Genevieve Pham-Kanter, Antoinette Schoar, Elis Sisli, Stanislav Sokolinski, Laura Starks, Daniel Schwartz, Schraga Schwartz, Asher Tishler, Lucy White, and Justin Wolfers. I also thank the Program on Corporate Governance at Harvard Law School and the Women and Public Policy Program at Harvard Kennedy School for hosting me as a fellow while working on the paper. Finally, I am grateful to the Israeli Ministry of Science and Technology and the Hebrew University’s School of Business Administration for financial support. This paper was previously circulated under the title “Does the Gender of Directors Matter?”

References

Adams, R. B., and Ferreira, D.. “A Theory of Friendly Boards.” Journal of Finance, 62 (2007), 217–250.CrossRefGoogle Scholar
Adams, R. B., and Ferreira, D.. “Women in the Boardroom and Their Impact on Governance and Performance.” Journal of Financial Economics, 94 (2009), 291–309.Google Scholar
Adams, R. B., and Funk, P.. “Beyond the Glass Ceiling: Does Gender Matter?” Management Science, 58 (2012), 219–235.Google Scholar
Ahern, K. R., and Dittmar, A. K.. “The Changing of the Boards: The Value Effect of a Massive Exogenous Shock.” Quarterly Journal of Economics, 127 (2012), 137–197.CrossRefGoogle Scholar
Allmendinger, J., and Hackman, J. R.. “The More, the Better? A Four-Nation Study of the Inclusion of Women in Symphony Orchestras.” Social Forces, 74 (1995), 423–460.Google Scholar
Anderson, T. W.“Estimating Linear Restrictions on Regression Coefficients for Multivariate Normal Distributions.” Annals of Mathematical Statistics, 22 (1951), 327–351.CrossRefGoogle Scholar
Angrist, J. D., and Pischke, J. S.. Mostly Harmless Econometrics: An Empiricist’s Companion. Princeton, NJ: Princeton University Press (2009).Google Scholar
Apesteguia, J.; Azmat, G.; and Iriberri, N.. “The Impact of Gender Composition on Team Performance and Decision-Making: Evidence from the Field.” Management Science, 58 (2012), 219–235.Google Scholar
Bear, J. A., and Woolley, A. W.. “The Role of Gender in Team Collaboration and Performance.” Interdisciplinary Science Reviews, 36 (2011), 146–153.Google Scholar
Bilimoria, D., and Piderit, S. K.. “Board Committee Membership: Effects of Sex-Based Bias.” Academy of Management Journal, 37 (1994), 1453–1477.Google Scholar
Carter, D. A.; D’Souza, F.; Simkins, B. J.; and Simpson, W. G.. “The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance.” Corporate Governance: An International Review, 18 (2010), 396–414.Google Scholar
Carter, D. A.; Simkins, B. J.; and Simpson, W. G.. “Corporate Governance, Board Diversity, and Firm Performance.” Financial Review, 38 (2003), 33–53.Google Scholar
Catalyst. “Women on Board.” Available at http://www.catalyst.org/system/files/2014_catalyst_census_women_board_directors_0.pdf(2014).Google Scholar
Erhardt, N. L.; Werbel, J. D.; and Shrader, C. B.. “Boards of Director Diversity and Firm Performance.” Corporate Governance: An International Review, 11 (2003), 102–111.Google Scholar
Farrell, K. A., and Hersch, P. L.. “Additions to Corporate Boards: The Effect of Gender.” Journal of Corporate Finance, 11 (2005), 85–106.Google Scholar
Government Companies Authority. Annual Reports on the Government Companies. Jerusalem, Israel: Government Companies Authority, Ministry of Finance (2007).Google Scholar
Greene, W. H. Econometric Analysis. Upper Saddle River, NJ: Pearson Education (2008).Google Scholar
Gupta, A., and Raman, K.. “Board Diversity and CEO Selection.” Journal of Financial Research, 37 (2014), 495–518.Google Scholar
Hausman, J. A.“Specification Tests in Econometrics.” Econometrica, 46 (1978), 1251–1271.Google Scholar
Hermalin, B. E., and Weisbach, M. S.. “Boards of Directors as an Endogenously Determined Institution: A Survey of Economic Literature.” Economic Policy Review, 9 (2003), 7–26.Google Scholar
Hoogendoorn, S.; Oosterbeek, H.; and van Praag, M.. “The Impact of Gender Diversity on the Performance of Business Teams: Evidence from a Field Experiment.” Management Science, 59 (2013), 1514–1528.Google Scholar
Hoxby, C.“Peer Effects in the Classroom: Learning from Gender and Race Variation.” National Bureau of Economic Research Working Paper No. 7867 (2000).CrossRefGoogle Scholar
Huang, J., and Kisgen, D. J.. “Gender and Corporate Finance: Are Male Executives Overconfident Relative to Female Executives?” Journal of Financial Economics, 108 (2013), 822–839.Google Scholar
Israeli Stock Exchange Authority. “Women on Boards” (in Hebrew). Available  at  http://www.isa.gov.il/Download/IsaFile_5625.pdf(2010).Google Scholar
Joecks, J.; Pull, K.; and Vetter, K.. “Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a ‘Critical Mass’?” Journal of Business Ethics, 118 (2013), 61–72.Google Scholar
Kanter, R. M. Men and Women of the Corporation. New York, NY: Basic Books (1977).Google Scholar
Kesner, I. F.“Directors’ Characteristics and Committee Membership: An Investigation of Type, Occupation, Tenure, and Gender.” Academy of Management Journal, 31 (1988), 66–84.CrossRefGoogle Scholar
Koplovitz, K.“Boardroom  Bound?  Ten  Steps  to  Get  You  There.”  Forbes.  Available  at  http://www.forbes.com/sites/kaykoplovitz/2015/04/22/boardroom-bound-ten-steps-to-get-you-there/ (2015).Google Scholar
Kramer, V. W.; Konrad, A. M.; and Erkut, S.. “Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance.” Working Paper, Wellesley Center for Women (2006).Google Scholar
Krippendorff, K. Content Analysis: An Introduction to Its Methodology. Thousand Oaks, CA: Sage (2004).Google Scholar
Lavi, Z.“The Ministry of Justice Is Increasing the Compensation of Outside Directors” (in Hebrew). Ynet. Available at http://www.ynet.co.il/articles/0,7340,L-3435614,00.html (2007).Google Scholar
Lavy, V., and Schlosser, A.. “Mechanisms and Impacts of Gender Peer Effects at School.” American Economic Journal: Applied Economics, 3 (2011), 1–33.Google Scholar
Lieblich, A.; Tuval-Mashiach, R.; and Zilber, T.. Narrative Research: Reading, Analysis, and Interpretation. Thousand Oaks, CA: Sage (1998).Google Scholar
Mace, M. L. Directors: Myth and Reality. Cambridge, MA: Harvard University (1971).Google Scholar
Matsa, D. A., and Miller, A. R.. “A Female Style in Corporate Leadership? Evidence from Quotas.” American Economic Journal: Applied Economics, 5 (2012), 136–169.Google Scholar
Peterson, C. A., and Philpot, J.. “Women’s Roles on U.S. Fortune 500 Boards: Director Expertise and Committee Memberships.” Journal of Business Ethics, 72 (2007), 177–196.Google Scholar
Rhode, D. L., and Packel, A. K.. “Diversity on Corporate Boards: How Much Difference Does Difference Make?” Delaware Journal of Corporate Law, 39 (2014), 377–426.Google Scholar
Rosener, J. B. America’s Competitive Secret: Utilizing Women as a Management Strategy. Oxford, UK: Oxford University Press (1995).Google Scholar
Ruigrok, W.; Peck, S.; and Tacheva, S.. “Nationality and Gender Diversity on Swiss Corporate Boards.” Corporate Governance, 15 (2007), 546–557.CrossRefGoogle Scholar
Schwartz-Ziv, M., and Weisbach, M. S.. “What Do Boards Really Do? Evidence from Minutes of Board Meetings.” Journal of Financial Economics, 108 (2013), 349–366.Google Scholar
Shrader, C. B.; Blackburn, V. B.; and Iles, P.. “Women in Management and Firm Financial Performance: An Exploratory Study.” Journal of Managerial Issues, 9 (1997), 355–372.Google Scholar
Spencer Stuart. Spencer Stuart Board Index. Chicago, IL: Spencer Stuart(2011).Google Scholar
Stemler, S.“An Overview of Content Analysis, Practical Assessment.” Research and Evaluation, 7 (2001), 137–146.Google Scholar
Stock, J. H.; Wright, J. H.; and Yogo, M.. “A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments.” Journal of Business and Economic Statistics, 20 (2002), 518–529.Google Scholar
Tinklin, T.; Croxford, L.; Ducklin, A.; and Frame, B.. “Gender and Attitudes to Work and Family Roles: The Views of Young People at the Millennium.” Gender and Education, 17 (2005), 129–142.CrossRefGoogle Scholar
Torchia, M.; Calabro, A.; and Huse, M.. “Women Directors on Corporate Boards: From Tokenism to Critical Mass.” Journal of Business Ethics, 102 (2011), 299–317.Google Scholar
Tuggle, C. S.; Sirmon, D. G.; and Bierman, L.. “From Seats at the Table to Voices in the Discussion: Exploring the Effects of Proportional Representation and Prestige on Minority Directors’ Participation in Board Meeting Discussions.” Conference on Corporate Governance, Missouri University, Columbia, MO (2011), 1–47.Google Scholar
Weisbach, M. S.“Outside Directors and CEO Turnover.” Journal of Financial Economics, 20 (1988), 431–460.Google Scholar
Woolley, A. W.; Chabris, C. F.; Pentland, A.; Hashmi, N.; and Malone, T. W.. “Evidence for a Collective Intelligence Factor in the Performance of Human Groups.” Science, 330 (2010), 686–688.CrossRefGoogle ScholarPubMed
Supplementary material: File

Schwartz-Ziv supplementary material

Appendix

Download Schwartz-Ziv supplementary material(File)
File 259.5 KB