Jennifer M. Knippen

Research SummaryThis study explores how external pressure for board gender diversity influences the increase of female directors. We propose that while external pressure has a positive effect on the increase of female directors on boards, it heightens the salience of gender in new director selection, making incumbent male directors more likely to treat the new female directors as outgroup members and consequently more likely to add them through addition of board seats rather than substitution of male directors. We further predict that new female directors added through additional board seats are less likely to serve on major board committees than those added through substitution of male directors. Results from a large sample of S&P 1,500 firms during 2004 to 2015 provide support our theoretical predictions. Managerial SummaryOur study intends to enhance the understanding of how external pressure influences a firm's decision to increase the number of female directors on the board. We find that, although external pressure makes firms more likely to increase female directors, firms tend to do it through the addition of board seats rather than through the replacement of incumbent male directors to the extent that the increase is a response to the external pressure. Moreover, we find that new female directors added through addition of board seats are less likely to serve on major board committees than those added through replacement of male directors. These findings suggest that external pressure has a positive but limited effect on countering the gender bias on corporate boards toward female directors.

We propose and test a theory of board discretion in the context of the board's selection of a female CEO. We propose that boards also have discretion, an area that has typically focused exclusively on managers, and examine the conditions under which boards, facing high levels of uncertainty, have the latitude to make nontraditional choices, particularly when a negative equity market reaction to such a selection is likely. In the context of the nontraditional choice of a female CEO successor, we observe that the strong financial health of the firm and boardroom and situation-specific experience grant the board the discretion to select a female CEO. We test our model using all Standard & Poors (S&P) 1500 firms that experienced a CEO succession between 2000 and 2013. Implications for practice and research are discussed.