Women on boards of directors: Effects on firm social performance in the basic materials and financial services sectors

Abstract

This study examined relationships between the number of female board members, board tenure, and board size on the number of 10K investigations that were instigated against firms in the basic materials and financial services sectors of the economy. After controlling for the effects of firm size, we found evidence of an interaction effect between the number of female directors and average board tenure for firms in the financial services sector, such that a higher number of women on boards coupled with longer average board tenure results in higher firm social performance (i.e., the fewer the number of 10K investigations brought against the firm). No link was found between female directors and average board tenure for the basic materials firms. Further, no interactive patterns were observed between female directors and board size in either sector. Our findings suggest that future board research may benefit from a "contingency approach, " as this study has provided some evidence that the relationships between board characteristics and firm performance may not be generalizable from one sector to another. Future research should carefully consider how the sector or industry may affect the impact of board characteristics on firm performance.