When the going gets tough: Board gender diversity in the wake of a major crisis

Abstract

Gender diversity on corporate boards continues to present a significant challenge, exacerbated by significant external disruptions such as financial crises or the recent COVID-19 pandemic. These exogenous shocks pressure organizations to reconcile diversity imperatives with more immediate concerns arising from the crises at hand. Employing elements from gender role and institutional theories, we argue that major exogenous shocks will negatively affect (i.e., reduce) gender diversity in corporate boards. Moreover, we propose that female CEOs and the strength of institutional mechanisms (i.e., quotas and corporate governance codes) will moderate (i.e., weaken) the negative effect of these shocks on board gender diversity. We examine these hypotheses in the context of the last global financial crisis (GFC), employing a panel of 10,181 unique firms across 21 countries between 2000 and 2015. We apply a two-way fixed effect difference-in-difference research design, complemented by an extensive battery of additional analyses to ensure robustness. Our results confirm a substantial decline in board gender diversity following the GFC. However, we do not find empirical support for female CEOs or institutional mechanisms in mitigating these diversity reductions. Following these findings, we propose several implications for research and policy.