A new study by Tracey Yue Wang, the John Spooner Professor of Finance at the Carlson School of Management at the University of Minnesota and Mariassunta Giannetti, professor at the Stockholm School of Finance in Sweden, finds that 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 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.
“Public attention is a powerful force, but it also has its limitations,” explains Dr. 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.”
Dr. Wang holds a master’s degree in economics from Ohio State University and a Ph.D. in finance from the University of Maryland.
The full study, “Public Attention to Gender Equality and Board Gender Diversity,” will be published in the Journal of Financial and Quantitative Analysis. It may be accessed here.