How Public Attention to Gender Equality Affects the Demand for Female Directors

Women are starkly underrepresented on corporate boards and more generally in leadership positions. Hillary Clinton’s U.S. presidential campaign and movements like #MeToo have recently attracted lots of attention to gender equality issues. As a result, biases, stereotypes, and female under-representation in leadership positions are widely debated.

In our recent working paper, we ask to what extent public attention to gender equality problems helps to reduce gender biases and stereotypes and to advance female representation in leadership positions. This is an important question because experiments in the psychology literature provide mixed evidence. On the one hand, some suggest that raising awareness of biases may reduce implicit biases and stereotyping (Bonnet, 2016). This would imply that greater public attention to gender equality problems should increase the demand for women in leadership positions and particularly on the boards of publicly listed companies.

On the other hand, others argue that some individuals may perceive public attention to gender equality and the associated pressure to hire more women as violating social norms and potentially leading to a decrease in the value of traditional male activities. This may precipitate a backlash against women, as has been argued for example in the case of gender quotas (Goldin, 2002).

We provide evidence that the effects of public attention to gender equality on individuals’ attitudes towards career women vary depending on preferences and culture. In particular, following heightened public attention to gender equality, implicit biases against career women decrease to a larger extent for individuals with views that are ex ante more favorable to women, such as liberals and individuals who self-report to have less pronounced explicit biases against working women. The implicit biases of women against career women also become less pronounced when public attention to gender equality is higher. However, the implicit biases of individuals who self-identify as conservatives and who explicitly prefer women to stay at home become stronger when public attention to gender equality is higher.

Based on these findings, we conjecture that time-varying public attention to gender equality may increase the demand for female directors to a larger extent in firms that are ex ante culturally more female friendly for two reasons. First, decision makers in these firms are likely to have always viewed women more favorably, and their implicit biases may be attenuated by public attention. Second, shareholders and other stakeholders in these firms, being ex ante more likely to be favorably disposed towards women, may put more pressure on the firms to reduce gender gaps, when they are made aware of gender equality problems, in comparison with those in other firms.

We map individual characteristics that are associated with more favorable effects of public attention to gender equality on implicit biases (such as being explicitly more favorable to career women, being liberal, or being a woman) to firm characteristics (such as firms with better diversity ratings, firms in democratic states, or firms with ex ante greater female board representation). We then test to what extent the proportion of female directors in these firms is more positively affected by public attention to gender equality issues. We find that, following heightened public attention to gender equality, firms with ex ante characteristics that reflect explicit attitudes more favorable to women are indeed more likely to increase female board representation. The results hold when we control for the supply of eligible women for board positions.

We also explore how public attention to gender equality affects the way firms recruit female directors. Specifically, we examine how public attention to gender equality affects gender differences in newly appointed directors’ qualifications and experiences and the role of prior connections in director appointments. We find that heightened public attention leads listed companies’ boards to reach out to a broader pool of potential female directors, including women with no prior listed-company board experience, women with solid senior management experience but no prior top leadership positions, and women from other industries.

There are however no obvious compromises on the quality of newly appointed female directors. For instance, on average, female directors are more likely to have industry experience than newly appointed male directors. High attention to gender equality reduces the gap in industry experience between female directors and male directors appointed by the same firm at the same time. Even in periods of high public attention, newly appointed female directors are more likely to have advanced education degrees and professional awards than male directors appointed at the same firm and at the same time. This analysis suggests that there is no shortage of women qualified to serve on boards.

We show that connections and “homophilistic’ biases –  individuals’ desire to work with similar people – rather than supply help constrain the demand for female directors. Connected men are more likely to be appointed to the board of a listed company than connected women, even after controlling for directors’ qualifications and experiences. An increase in public attention to gender equality not only increases the probability that connected women will be appointed, but it is also associated with a lower reliance on connections in director appointment, leading to fewer connected men being appointed. These effects contribute to higher female board representation and suggest that, when public attention to gender equality is weak, homophily and other biases constrain female board representation when firms select candidates within their director networks.

Overall, our findings suggest that increasing public awareness, an alternative intervention to board quotas and other affirmative action policies, may lead to greater gender equality. The strength of this alternative intervention is that it avoids the cost of imposing a one-size-fit-all policy.

However, the effects associated with public awareness are relatively small. Even in firms with an ex ante culture more attentive to gender equality, when public attention is at its maximum during the sample period, the board gender ratio increases between 1 and 3 percentage points, suggesting that most boards add between one and two female directors during any year. While persistent public attention could improve gender equality, just a temporary increase falls well below the effect of quotas, which in California and Norway and other European countries mandate between 33 percent and 50 percent female directors (Hwang, Shivdasani, and Simintzi, 2018).

Even more importantly, explicit regulation and affirmative action policies may be necessary for firms whose ex ante culture is more averse to diversity and gender equality.

REFERENCES

Bohnet, I., 2016. What Works. Harvard University Press.

Goldin, Claudia, A Pollution Theory of Discrimination: Male and Female Occupations and Earnings, NBER Working Paper No. 8985, 2002.

Hwang, S., A. Shivdasani, and E. Simintzi, 2018. Mandating Women on Boards: Evidence from the United States. Working Paper, University of North Carolina

This post comes to use from professors Mariassunta Giannetti at the Stockholm School of Economics and Tracy Wang at the University of Minnesota’s Carlson School of Management. It is based on their recent paper, “Public Attention to Gender Equality and The Demand for Female Directors,” available here.

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