Do women directors influence CEO performance-induced turnover in China?

Abstract

We investigate whether women directors influence performance-induced CEO turnover. This question is important considering recent calls for the appointment of women directors vis-à-vis the need to replace non-performing CEOs. Existing studies report mixed results in different institutional settings. We focus on China, a setting with a dominance of state ownership and absence of board gender recommendations. Using data from Chinese listed firms (2005–2018), we find that while women directors influence the sensitivity of firm performance to CEO turnover, this is only noticeable in non-state-owned firms. We further find that non-executive women directors affect the firm performance–CEO turnover relationship, while executive women directors do not. We also demonstrate that women directors discipline CEOs after poor performance when more than one is on the board and they have business expertise. Overall, our results suggest that women directors are effective (ineffective) in reducing agency problems in non-state-owned firms (state-owned firms).