Can board gender diversity promote corporate social performance?

Abstract

Purpose This paper examines if gender diversity on corporate boards promotes corporate social performance across industries and across countries. Design/methodology/approach Fixed-effect panel models are estimated using European-wide data from 2002 through 2013. Instrumental variable estimation and propensity score matching are also employed to control for potential endogeneity. Findings Board gender diversity improves environmental and social performance, and consequently the corporate social performance. Although the positive effect of gender diversity is prevalent across industries, the effect is more pronounced for firms in emerging markets. Practical implications The findings suggest that gender law that fosters gender diversity can promote corporate social performance in firms and the benefit can be enjoyed with just an introduction of one female director to the board. Promotion of gender diversity in Europe is most beneficial in emerging markets. Originality/value The results provide new insights to the literature as we find that a critical mass of female directors on boards is not required to promote corporate social performance. The research also highlights that board gender diversity enhances corporate social performance irrespective of the industry and the effect on corporate social performance is more pronounced in emerging markets where regulations regarding CSR are not so clear-cut.