AV

Research Explores the Relationship between Female Board Representation and Corporate Social Responsibility

Body

If gender diversity has a positive association with corporate social responsibility, is it up to government to create requirements in order to optimize a boardroom? Jenelle K. Conaway, assistant professor of accounting, has conducted research to determine the impact of female directors on boards’ commitment to socially responsible business practices. Together with Ana Albuquerque and Francois Brochet from Boston University, the team studied the effect of corporate board gender quotas on the corporate social responsibility (CSR) activities of European publicly listed companies.

Jenelle Conway
Jenelle Conway

“The Norwegian government was the first to establish a 40% female quota in 2003, with compliance by 2006 for state-owned firms and 2008 for publicly traded firms,” says Conaway. “Spain established a 40% female quota in 2007 for compliance by 2015, but only for publicly traded companies with more than 250 employees.” Other European Union countries have also enacted legislation that generally consists of a gender quota and penalties for non-compliance. The penalties vary in terms of severity. In Norway, companies are dissolved if they violate quota. In Spain, violations make board appointments null.

“Our research informs the current debate on whether regulation or market forces should determine gender diversity in corporate boardrooms, including in the U.S.,” says Conaway.

The California state senate passed a bill in 2018 requiring publicly traded firms headquartered in California to have at least one woman on their boards by the end of 2019, and at least 40% of board seats by 2021.

Creating shareholder value is no longer considered enough and firms are being held accountable for their CSR efforts. As such, this study does not limit itself to the boardroom. Increasing gender diversity across an organization has also been shown to positively impact CSR. “Gender diversity in the boardroom is expected to influence gender parity within the rest of the organization,” says Conaway, “one of the many factors that determine a firm’s CSR performance.”