CEO-director ties and board gender diversity: US evidence

Hoa Luong, Mehdi Khedmati, Lan Anh Nguyen, Asror Nigmonov, Nafisa Zabeen Ovi and Syed Shams

Journal of Behavioral and Experimental Finance, 2023, vol. 40, issue C

Abstract: The gender legislation enacted around the world has put enormous pressure on companies to increase the number of women on their boards. Employing US firm-specific data, we document a significant negative relationship between CEO-director ties and female representation on the board, suggesting that socially connected directors are detrimental to gender parity in senior management. We find that the situation improves in firms with female directors with valuable attributes while being moderated by CEO characteristics. Cross-sectional analyses reveal that the association is more pronounced during the low board gender diversity periods and for firms that are led by male CEOs or have weak monitoring mechanism. We rule out endogeneity concerns by performing a battery of analyses. The findings remain robust in a range of sensitivity tests. Our study offers practical implications for regulators and top management teams to improve board effectiveness, thus engendering lasting transformational change in the boardroom.

Keywords: Chief executive officers (CEOs); Independent directors; Board connection; Board gender diversity; Female director (search for similar items in EconPapers)
JEL-codes: G34 J16 M14 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:40:y:2023:i:c:s2214635023000758

DOI: 10.1016/j.jbef.2023.100861

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