A selection of interesting research and articles we found recently on gender and ethical leadership.

CEO gender, ethical leadership, and accounting conservatism
Simon Ho and his colleagues note that since male CEOs dominate corporate leadership, the literature on top management decision making suffers from an implicit masculine bias. Although research indicates that males and females are biologically and psychologically different, the leadership characteristics of female CEOs are largely unexplored. Two of these characteristics, risk aversion and ethical sensitivity, are tied to key accounting issues, such as conservatism in financial reporting and steadfast opposition to fraud.

In this study, the authors examined the relationship between CEO gender and accounting conservatism, finding a positive association between the two. Consistent with conventional wisdom, this association appears to be stronger in firms with high rather than low litigation and takeover risks. This study contributes to the ethics literature by highlighting the benefits of gender diversity in upholding the integrity of financial reporting.

The full paper is available at: Simon S. M. Ho, Annie Yuansha Li, Kinsun Tam and Feida Zhang. 2015. CEO Gender, Ethical Leadership, and Accounting Conservatism.
Journal of Business Ethics, 127(2), 351-370.


Does gender diversity in the boardroom affect risk management and R&D investment?
Yes, according to Shimin Chen, Xu Ni and Jamie Tong. Increasing gender diversity in the boardroom has been promoted as a way to enhance corporate governance and risk management. This study empirically examines whether boards with more female directors play a role in reducing R&D risk. The researchers first show that female directors help to reduce the positive relationship between R&D investment and future performance volatility. They then report that firms with more gender-diverse boards exhibit a lower adverse effect of R&D on the cost of debt.

These results are robust to endogeneity analysis, alternative measures of gender diversity and risky investment, and other sensitivity tests. Overall, the results suggest that female directors improve board effectiveness in risk management with respect to R&D investment.

Read more at: Shimin Chen, Xu Ni and Jamie Y. Tong. 2015. Gender Diversity in the Boardroom and Risk Management: A Case of R&D Investment.
Journal of Business Ethics, published online 08 Jan 2015.


Do independent and female directors affect firm performance?
Yes, according to multi-country research by Siri Terjesen, Eduardo Couto and Paulo Francisco. This study empirically analysed whether gender diversity enhances boards of directors’ independence and efficiency. Using data from 3,876 public firms in 47 countries and controlling for a wide set of corporate governance mechanisms, the authors found that firms with more female directors have higher firm performance by market (Tobin’s Q) and accounting (return on assets) measures.

The results also suggest that external independent directors do not contribute to firm performance unless the board is gender diversified. These results held with respect to different estimation models and robustness tests. Overall, the findings provide evidence that female directors enhance boards of directors’ effectiveness. Finally, the researchers found that firms that are concerned with board independence and firms in more complex environments are more likely to have gender-balanced boards.

Find more details at: Siri Terjesen, Eduardo Barbosa Couto and Paulo Morais Francisco. 2015. Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity.
Journal of Management & Governance, published online 13 Jan 2015.


What drives gender quotas for boards?
Siri Terjesen, Ruth Aguilera and Ruth Lorenz note that 10 countries have established quotas for female representation on publicly-traded corporate and/or state-owned enterprise boards of directors, ranging from 33 to 50 %, with various sanctions. Fifteen other countries have introduced non-binding gender quotas in their corporate governance codes enforcing a “comply or explain” principle. Countless other countries’ leaders and policy groups are in the process of debating, developing and approving legislation around gender quotas in boards. Taken together, gender quota legislation significantly impacts the composition of boards of directors and thus the strategic direction of these publicly-traded and state-owned enterprises. This article outlines an integrated model of three institutional factors that explain the establishment of board-of-directors gender quota legislation based on the premise that the country’s institutional environment co-evolves with gender corporate policies.

The authors argue that these three key institutional factors are female labour market and gendered welfare state provisions, left-leaning political government coalitions, and path-dependent policy initiatives for gender equality, both in the public realm as well as in the corporate domain. They discuss implications of their conceptual model and empirical findings for theory, practice, policy, and future research. These include the adoption and penalty design of board diversity practices into corporate practices, bottom-up approaches from firm to country-level gender board initiatives, hard versus soft regulation, the leading role of Norway and its isomorphic effects, the likelihood of engaging in decoupling, the role of business leaders, and the transnational and international reaction to board diversity initiatives.

Read further in: Siri Terjesen, Ruth V. Aguilera and Ruth Lorenz.  2014. Legislating a Woman’s Seat on the Board: Institutional Factors Driving Gender Quotas for Boards of Directors.
Journal of Business Ethics, published online February, 2014.


Board gender diversity and stock portfolio performance
There is growing regulatory pressure on firms worldwide to address the under-representation of women in senior positions. Regulators have taken a variety of approaches to the issue. Larelle Chapple and Jacquelyn Humphrey investigated a jurisdiction that has issued recommendations and disclosure requirements, rather than implementing quotas. Much of the rhetoric surrounding gender diversity centers on whether diversity has a financial impact.

These authors took an aggregate (market-level) approach and compared the performance of portfolios of firms with gender diverse boards to those without. They also investigated whether having multiple women on the board is linked to performance, and if there was a within-industry effect. Overall, they did not find evidence of an association between diversity and performance. They found weak evidence of a negative correlation between having multiple women on the board and performance, but that in some industries diversity is positively correlated with performance.

More information is available at: Larelle Chapple and Jacquelyn E. Humphrey. 2014. Does Board Gender Diversity Have a Financial Impact? Evidence Using Stock Portfolio Performance.
Journal of Business Ethics, 122(4), 709-723.


The business case for board age and gender diversity
The inconsistent findings of past board diversity research demand a test of competing linear and curvilinear diversity–performance predictions. This research focuses on board age and gender diversity, and presents a positive linear prediction based on resource dependence theory, a negative linear prediction based on social identity theory, and an inverted U-shaped curvilinear prediction based on the integration of resource dependence theory with social identity theory.

The predictions were tested using archival data on 288 large organisations listed on the Australian Securities Exchange, with a 1-year time lag between diversity (age and gender) and performance (employee productivity and return on assets). The results indicate a positive linear relationship between gender diversity and employee productivity, a negative linear relationship between age diversity and return on assets, and an inverted U-shaped curvilinear relationship between age diversity and return on assets. The findings provide additional evidence on the business case for board gender diversity and refine the business case for board age diversity.

See more at: Muhammad Ali, Yin Lu Ng and Carol T. Kulik. 2014. Board age and gender diversity: A test of competing linear and curvilinear predictions.
Journal of Business Ethics, 125(3), 497-512.