Double-edged effect of female directors on strategic change: more monitoring but less risk-taking

Abstract

Research suggests that female directors can affect strategic change by changing board dynamics via gender diversity; however, this is only part of the story. In this study, we examine new mechanisms underlying the link between female directors and strategic change through the lens of gender-specific action tendencies. In particular, we explore the mediating effects of compensation monitoring of top managers and corporate risk-taking to explain the different pathways between female directors and strategic change. Using a sample of Chinese listed manufacturing firms over the 2010–2016 period, we find that female directors can indirectly improve strategic change via more effective monitoring of top manager compensation, but they can also inhibit strategic change indirectly via less risk-taking. These findings contribute to the literature by providing new insights into how female directors affect strategic change through the lens of gender-specific action tendencies.