Evaluating Board Candidates: A Threat-Contingency Model of Shareholder Dissent Against Female Director Candidates

Arjun Mitra (), Corinne Post () and Steve Sauerwald ()
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Arjun Mitra: Department of Management, College of Business and Economics, California State University, Los Angeles, Los Angeles, California 90032
Corinne Post: Department of Management, Lehigh University, Bethlehem, Pennsylvania 18015
Steve Sauerwald: Department of Managerial Studies, University of Illinois at Chicago, Chicago, Illinois 60607

Organization Science, 2021, vol. 32, issue 1, 86-110

Abstract: Given the growing corporate social responsibility (CSR) pressures to increase board gender diversity and the scrutiny afforded to firms that fail to appoint female directors, one may expect shareholders to vote with greater support for women (than for men) nominated to boards. However, diversity management research suggests that pressures to improve female representation in organizations and in leadership roles may also backfire. We propose a threat-contingency model of shareholder dissent against female director candidates to explain when shareholders will be more or less likely to dissent against female (relative to male) directors. Specifically, we advance CSR legitimacy threats and agency threats as conditions contextualizing shareholder dissent against female director candidates. Using a sample of 50,202 director elections at 1,104 public firms from 2003 to 2015, we find that female directors receive less dissent from shareholders; further, low female board representation intensifies this leniency as CSR legitimacy threats become more salient. However, when firm-related agency threats occur (e.g., firm underperformance and media controversies), shareholders’ leniency toward female director candidates dissipates, and when directors themselves present agency threats (e.g., director attendance problems and nonindependence), shareholders evaluate female directors more harshly than male directors. Underlining the relevance of our theory, our supplementary analyses show that shareholder dissent increases the probability of director turnover. These findings contribute to theory and research on women on boards, firm responses to institutional pressures, and shareholder dissent.

Keywords: female directors; shareholder dissent; agency threats; CSR legitimacy threats; CSR pressure; women on boards (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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