Research Brief

Public attention leads to more women in boardrooms, divides remain

A diverse group of colleagues in a boardroom meeting in the late afternoon.
Credit: Getty Images.

On average, more women earn positions on U.S. public company boards following rises in public attention to gender equality issues, such as the Me Too movement, but this increase in representation largely happens at firms where a more inclusive corporate culture already exists.

The findings are from a forthcoming study in the Journal of Financial and Quantitative Analysis co-authored by Tracy Wang at the University of Minnesota Carlson School of Management and Mariassunta Giannetti of the Stockholm School of Economics. Wang says the study suggests an interesting paradox.

“Public attention is a powerful force, but it also has its limitations,” explains Wang. “On the one hand, heightened public attention brings changes in director recruitment practices, which can have long-term positive effects. On the other hand, we find that increases in attention could lead to more polarization in firms’ responses. Companies that really need improvement in diversity tend to react negatively to heightened public attention.”

The researchers used firms’ financial data, strength ratings for diversity policies, political leanings and corporate board data consisting of 34,283 directors from 5,936 U.S. public companies from 2005 to 2017. To identify changes in public attention, the researchers analyzed Google Trends data for the search term “gender equality.” 

Researchers discovered when there is greater public attention, companies broaden their recruitment search outside of existing networks and reach out to a larger pool of women. Findings also push back on a common critique of women hired in these periods, showing the new female directors don’t weaken the quality of the board. Wang says expanding the search for directors beyond existing connections is key to promoting board gender diversity.

“Our research shows management previously focused on a very narrow pool, reinforcing the idea of the ‘Old Boys Club,’” says Wang. “When we look at stock market reactions, we find investors have a more favorable view of these newly-recruited female directors relative to the newly-recruited male directors.”

Wang says the study’s findings hold implications for future research on how public attention impacts other gaps in boardroom representation, such as racial diversity.

Line graph comparing two trend lines.
The change in the Search Volume Index (SVI) for the term “Gender Equality” on Google Trends alongside the change in average Board Gender Ratio over time. Periods such as the Fair Pay Debate, Hillary Clinton’s presidential campaign, the Women’s March and the Me Too movement are highlighted. Credit: M. Giannetti and T. Wang.
Line graph comparing three trend lines.
As public attention to gender equality increased on the Google Trends Search Volume Index, the divide in the board gender ratio deepened between firms that had a more inclusive corporate culture to women vs. those that had a less inclusive corporate culture. Credit: M. Giannetti and T. Wang.

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