The impact of board gender quotas on analyst recommendations: A difference-in-differences analysis
El impacto de las cuotas de género en los consejos de administración sobre las recomendaciones de los analistas: Un análisis de diferencias en diferencias
Abstract
Norway provides the case study for examining the impact of board gender quotas on firm performance. The debate that ultimately led to the introduction of the quota was heated and polarised, with opponents of the quota arguing that the inability of the firm's owners to select the best candidates for the board (regardless of gender) would result in poorly managed firms. Although several articles have empirically examined the impact of the Norwegian gender quota on performance, the available evidence is inconclusive. These articles use return on assets and/or Tobin's Q as indicators of performance. The present study contributes to the literature by providing a new and complementary approach to this research topic. To this end, we examine the impact of board gender quotas on analysts' perceptions of performance, as measured by investment recommendations. The research design adopts a difference-in-differences methodology coupled with fixed effects panel data estimation. The results document that recommendations on Norwegian stocks did not change significantly after the introduction of the quota. This result is robust to a variety of sensitivity analyses and controls.
Downloads
-
Abstract522
-
PDF336
-
HTML91
References
Abadie, A. (2005). Semiparametric difference-in-differences estimators. The Review of Economic Studies, 72(1), 1-19. https://doi.org/10.1111/0034-6527.00321
Abadie, A., Athey, S., Imbens, G. W., & Wooldridge, J. (2017). When should you adjust standard errors for clustering? (NBER Working Paper No. 24003). National Bureau of Economic Research. https://doi.org/10.3386/w24003
Aguilera, R. V., & Cuervo-Cazurra, A. (2004). Codes of good governance worldwide: what is the trigger?. Organization Studies, 25(3), 415-443. https://doi.org/10.1177/0170840604040669
Ahern, K. R., & Dittmar, A. K. (2012). The changing of the boards: The impact on firm valuation of mandated female board representation. The Quarterly Journal of Economics, 127(1), 137-197. https://doi.org/10.1093/qje/qjr049
Barth, M. E., & Israeli, D. (2013). Disentangling mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2-3), 178-188. https://doi.org/10.1016/j.jacceco.2013.11.002
Bradshaw, M. T. (2002). The use of target prices to justify sell‐side analysts' stock recommendations. Accounting Horizons, 16(1), 27-41. https://doi.org/10.2308/acch.2002.16.1.27
Bøhren, Ø., & Strøm, R. Ø. (2010). Governance and politics: Regulating independence and diversity in the board room. Journal of Business Finance & Accounting, 37(9‐10), 1281-1308. https://doi.org/10.1111/j.1468-5957.2010.02222.x
Certo, S. T. (2003). Influencing initial public offering investors with prestige: Signaling with board structures. Academy of Management Review, 28, 432–446. https://doi.org/10.5465/amr.2003.10196754
Core, J. E., Guay, W. R., & Rusticus, T. O. (2006). Does weak governance cause weak stock returns? An examination of firm operating performance and investors' expectations. Journal of Finance, 61(2), 655-687. https://doi.org/10.1111/j.1540-6261.2006.00851.x
Dale-Olsen, H., Schøne, P., & Verner, M. (2013). Diversity among Norwegian boards of directors: Does a quota for women improve firm performance? Feminist Economics, 19(4), 110-135. https://doi.org/10.1080/13545701.2013.830188
Davis, G. F., & Mizruchi, M. S. (1999). The money center cannot hold: Commercial banks in the US system of corporate governance. Administrative Science Quarterly, 44, 215–239. https://doi.org/10.2307/2666995
Eckbo, B. E., Nygaard, K., & Thorburn, K. S. (2021). Valuation Effects of Norway’s Board Gender-Quota Law Revisited (May 25, 2021). Management Science, Forthcoming, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 463/2016. Available at SSRN: https://ssrn.com/abstract=2746786. https://dx.doi.org/10.2139/ssrn.2746786
Fernández, P. (2008). Métodos de valoración de empresas. IESE Business School-Universidad de Navarra, DI 771. Available at: https://gc.scalahed.com/recursos/files/r161r/w25540w/D1FZ114_S7_R2.pdf
Ferreira, D. (2015). Board diversity: Should we trust research to inform policy? Corporate Governance: An International Review, 23(2), 108-111. https://doi.org/10.1111/corg.12092
Forbes, D., & Milliken, F. J. (1999) Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Academy of Management Review, 24, 489–505. https://doi.org/10.5465/amr.1999.2202133
Garcia-Blandon, J., Argilés-Bosch, J. M., Ravenda, D., & Castillo-Merino, D. (2022). Board gender quotas, female directors and corporate tax aggressiveness: A causal approach. International Review of Financial Analysis, 79, 102010. https://doi.org/10.1016/j.irfa.2021.102010
Gertler, P. J., Martinez, S., Premand, P., Rawlings, L. B., & Vermeersch, C. M. (2016). Impact Evaluation in Practice. Washington, USA: The World Bank.
Gregoriv{c}, A., & Hansen, J. L. (2017). Women’s path to the boardroom: The case of Denmark. In Gender diversity in the Boardroom (pp. 159-181). Cham, Switzerland: Palgrave Macmillan.
Hillman, A. J., Shropshire, C., & Cannella Jr, A. A. (2007). Organizational predictors of women on corporate boards. Academy of Management Journal, 50(4), 941-952. https://doi.org/10.5465/amj.2007.26279222
Hirshleifer, D., Subrahmanyam, A., & Titman, S. (2006). Feedback and the success of irrational investors. Journal of Financial Economics, 81(2), 311-338. https://doi.org/10.1016/j.jfineco.2005.05.006
Ioannou, I., & Serafeim, G. (2015). The impact of corporate social responsibility on investment recommendations: Analysts' perceptions and shifting institutional logics. Strategic Management Journal, 36(7), 1053-1081. https://doi.org/10.1002/smj.2268
Jegadeesh, N., Kim, J., Krische, S. D., & Lee, C. M. (2004). Analyzing the analysts: When do recommendations add value?. The Journal of Finance, 59(3), 1083-1124. https://doi.org/10.1111/j.1540-6261.2004.00657.x
Kausar, A., Shroff, N., & White, H. (2016). Real effects of the audit choice. Journal of Accounting and Economics, 62(1), 157-181. https://doi.org/10.1016/j.jacceco.2015.10.001
La Porta, R., & Lopez-de-Silanes, F. (1998). Law and finance. Journal of Political Economy, 106(6), 1113-1155. https://doi.org/10.1086/250042
Martínez-Córdoba, P. J., Benito, B., & García-Sánchez, I. Mª. (2023). Women's management in local government: The effects of substantive representation on welfare service efficiency. Social Policy & Administration, 57(3), 272-286. https://doi.org/10.1111/spol.12853
Matsa, D. A., & Miller, A. R. (2013). A female style in corporate leadership? Evidence from quotas. American Economic Journal: Applied Economics, 5(3), 136-69. https://doi.org/ 10.1257/app.5.3.136
Mummolo, J., & Peterson, E. (2018). Improving the interpretation of fixed effects regression results. Political Science Research and Methods, 6(4), 829-835. https://doi.org/10.1017/psrm.2017.44
Navarro-García, J. C., Ramón-Llorens, M. C., & García-Meca, E. (2022). Female directors and corporate reputation. BRQ Business Research Quarterly, 25(4), 352-365. https://doi.org/10.1177/2340944420972717
Pfeffer, J., & Salancik. G. (1978). The External Control of Organizations. New York, USA: Harper & Row.
Pugliese, A., Bezemer, P. J., Zattoni, A., Huse, M., Van den Bosch, F. A., & Volberda, H. W. (2009). Boards of directors' contribution to strategy: A literature review and research agenda. Corporate Governance: An International Review, 17(3), 292-306. https://doi.org/10.1111/j.1467-8683.2009.00740.x
Reguera-Alvarado, N., de Fuentes, P., & Laffarga, J. (2017). Does board gender diversity influence financial performance? Evidence from Spain. Journal of Business Ethics, 141(2), 337-350. https://doi.org/10.1007/s10551-015-2735-9
Seierstad, C. (2016). Beyond the business case: The need for both utility and justice rationales for increasing the share of women on boards. Corporate Governance: An International Review, 24(4), 390-405. https://doi.org/10.1111/corg.12117
Sinani, E., Stafsudd, A., Thomsen, S., Edling, C., & Randøy, T. (2008). Corporate governance in Scandinavia: Comparing networks and formal institutions. European Management Review, 5(1), 27-40. https://doi.org/10.1057/emr.2008.1
Teigen, M. (2015). The making of gender quotas for corporate boards in Norway. In F. Engelstad, & A.Hagelund (Eds.), Cooperation and conflict the Nordic way (pp. 96-117). Warsaw, Poland: De Gruyter Open Poland. https://doi.org/10.1515/9783110436891.
Terjesen, S., Aguilera, R. V., & Lorenz, R. (2015). Legislating a woman’s seat on the board: Institutional factors driving gender quotas for boards of directors. Journal of Business Ethics, 128(2), 233-251. https://doi.org/10.1007/s10551-014-2083-1
Yang, P., Riepe, J., Moser, K., Pull, K., & Terjesen, S. (2019). Women directors, firm performance, and firm risk: A causal perspective. The Leadership Quarterly, 30(5), 101297. https://doi.org/10.1016/j.leaqua.2019.05.004
Zuckerman, E. W. (1999). The categorical imperative: Securities analysts and the illegitimacy discount. American Journal of Sociology, 104(5), 1398-1438. https://doi.org/10.1086/210178
Copyright (c) 2024 Revista de Contabilidad - Spanish Accounting Review
This work is licensed under a Creative Commons Attribution 4.0 International License.
The publications in this journal are subject to the following terms:
1. Ediciones de la Universidad de Murcia (EDITUM) and ASEPUC conserve the patrimonial rights (copyright) of the published manuscripts, and favour and allow their reuse under the licence of use indicated in point 2.
2. The manuscripts are published in the electronic edition of the journal under an Attribution-NonCommercial-NoDerivatives 4.0 International licence. It allows to copy, distribute and include the article in a collective work (for example, an anthology), as long as there is no commercial purpose, the article is not altered or modified and the original work is properly cited. This journal is free of charge for the Open Access publication. ASEPUC and EDITUM finance the productiona and publication costs of the manuscripts.
3. Conditions for self-archiving. Authors are permitted and encouraged to electronically disseminate the published version of their works, as it favors their circulation and dissemination and thus a possible increase in their citation and reach among the academic community.
