Gender diversity on corporate boards has received academic, as well as regulatory attention over the past two decades. Recent years have also seen institutional investors become active in advocating for gender diversity on corporate boards. Though there has been an increase in the number of women directors over the past decades there continue to be barriers arising from “discrimination and culture” with concerns about “Tokenism” and the lack of a trickle-down effect to women in lower levels of the firm. In this study, we examine a hitherto unexplored mechanism that does not rely on regulatory mandates and that links the large literature on female political representation with gender diversity on corporate boards. We show that women candidates that win in close elections in House, Senate or Gubernatorial races lead to an increase in the number of female directors in firms located in these districts. The causal effect of electoral wins by women on board gender diversity is higher when the winning woman candidate receives higher media coverage and when voter turnout is high. These effects are consistent with the proposed mechanism that electoral wins convey information about majority views on women leadership and change gender related social norms that lead to local firms increasing board gender diversity. The evidence suggests that successful women leadership in the political sphere has a spillover effect on women leadership in the corporate world.
Accounting and Financial Management
corporate leadership, gender, elections