Patience in the Boardroom: Female Board Representation and CEO Performance-Induced Turnover

• In Event: Research about Board and Strategy

Abstract

Research shows that the performance effect of female board representation, if any, is weak. One explanation is that, with gender equality in their constitutions, Anglo-Saxon countries tend to have high levels of gender parity in their values, experience, and knowledge, which impedes finding significant effects of female directors. This paper focuses on Russia, a patriarchal country with vast social gender differences, where patience and supportiveness are considered fundamental female qualities. We study the impact of women in the boardroom upon the dismissal of a chief executive officer (CEO), a decision with which boards are primarily charged. We show that female representation on boards is associated with lower CEO turnover–performance sensitivity and that the gender effect appears more pronounced on boards where female directors are less likely to represent tokenism. Further, our results suggest that female directors’ patience with CEO dismissal decisions pays off, since such decisions are associated with improved future firm value. We also shed light on plausible channels through which female directors add value. We find that gender-diverse boards tend to be more active (i.e., hold more board meetings) after CEO retention decisions.

Authors

• Oksana Kim, Minnesota State University - Mankato

• Yu Flora Kuang, The University of Melbourne

• Bo Qin, The University of Melbourne