Corporate Culture, Innovation, and Female Board Representation: Evidence from Earnings Conference Calls

Tanakorn Likitapiwat, Sirimon Treepongkaruna, Pornsit Jiraporn and Ali Uyar
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Tanakorn Likitapiwat: Chulalongkorn Business School, Chulalongkorn University, Thailand
Sirimon Treepongkaruna: Sasin School of Management, Chulalongkorn University, Thailand 3UWA Business School, The University of Western Australia, Australia
Pornsit Jiraporn: Great Valley School of Graduate Professional Studies, Pennsylvania State University, USA
Ali Uyar: Excelia Business School, 17000 La Rochelle, France

Quarterly Journal of Finance (QJF), 2022, vol. 12, issue 04, 1-37

Abstract: Exploiting a novel measure of corporate culture based on cutting-edge machine learning algorithms, we examine how female board representation influences a culture of innovation, and also whether female directors spur innovation culture in the presence of an active takeover market. Our results show that higher board gender diversity improves a corporate innovation culture considerably. Specifically, a rise in female board representation by one standard deviation improves an innovative culture by 4.37%. The findings corroborate the argument that female directors infuse the firm with new ideas and different perspectives, thereby enhancing an innovative culture. Furthermore, we also show that female board representation’s interaction with the takeover market, which is a crucial external governance mechanism, spurs a corporate innovation culture as well. This implies that board gender diversity substantially softens the negative effect of hostile takeover threats on corporate innovation. Our study is the first to link board gender diversity to a culture of innovation and show the interaction effect with takeover threats.

Keywords: Corporate culture; innovation; innovative culture; board gender diversity; female board representation; corporate governance (search for similar items in EconPapers)
JEL-codes: G32 M14 O31 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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DOI: 10.1142/S2010139222500124

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