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 impact of investor buy-in in increasing corporate-leadership diversity.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 323-348 |
| Number of pages | 26 |
| Journal | Journal of Financial Economics |
| Volume | 149 |
| Issue number | 2 |
| DOIs | |
| State | Published - Aug 2023 |
Funding
The authors do not have permission to share data. Code for this article can be found at https://doi.org/10.17632/858352hkxh.1. Toni Whited was the editor for this article. We thank Reena Aggarwal, Alex Edmans, Rüdiger Fahlenbrach, Daniel Ferreira, Eli Fich, Jillian Grennan, Joseph Grundfest, Jarrad Harford, Peter Iliev, Lisa Kammert, Doron Levit, Marc Lipson, Joshua Pierce, Ellen Quigley, Miriam Schwartz-Ziv, Parth Venkat, Tracy Wang, and seminar participants at Chinese University of Hong Kong, Florida State University, Georgetown University, London Business School, New Economic School, Nova School of Business & Economics, Ohio State University, Pennsylvania State University, Singapore Management University, Tel Aviv University, University of Bristol, University of Cambridge, University of Exeter, University of Lancaster, University of Manchester, University of Maryland, University of Oklahoma, University of South Carolina, University of Texas at Dallas, University of Utah, University of Virginia, UNSW Business School, Washington University in St. Louis, York University, Financial Intermediation Research Society Conference, Financial Management Association Conference, RCFS Winter Conference, Smokey Mountain Finance Conference, and Weinberg Center Corporate Governance Symposium, for helpful comments. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Keywords
- Directors
- Gender diversity
- Indexing
- Institutional ownership
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management
