The Role of Rookie Female Directors in a Post-Quota Period: Gender Inequalities within French Boards.

Rebérioux, A., & Gwenaël Roudaut, (2019). Industrial Relations: A Journal of Economy and Society 58(3): 423-83

The present study aims to understand the consequences of gender quotas on the distribution of positions within boards and on pay gaps across gender, focusing on the French case.

SUMMARY

Gender quotas were adopted in France in 2011 requiring “each gender to represent at least 20 percent of directors in 2014 and 40 percent in 2017”. While the impact of these quotas on performance has been previously studied, no research has been done on the positions allocated to the new female directors and how they have been integrated into the functioning of the boards. To understand the consequences of a gender quota, the authors examine the positions allocated to the “rookie female directors” (the population of new female directors with no prior board experience) and hypothesize that while the quotas tackle the issue of “women underrepresentation” within corporate boards, they do not guarantee an equal “distribution of positions and fees across gender” resulting in a new glass ceiling of “positional segregation”. 

Data 

They use French corporate data with a sample of 120 firms belonging to the SBF120 index in 2011 (“the 120 largest listed firms in 2011 by market capitalization on Euronext-Paris”), over the 2006-2014 period, provided by Ehtics&Boards, an international board-watching agency that collects individual data on board composition and directors. Additional sources include annual reports and internet searches. The final sample thus includes 12,750 individual firm-year observations. 

Methodology

To examine the roles assigned to the rookie female directors, the authors estimate the likelihood that a new female director gains access to committees using multinomial ordered logit and then OLS regressions for robustness checks, with firm and year fixed effects. They regress different dependent variables (number of committee memberships, number of board meetings, number of monitoring or advising committee memberships or chairs, director compensation) on a set of individual characteristics (being a rookie female director, tenure, age, industry expertise, education, etc.). To “measure and compare the magnitude of the compensation gap before and after the quota”, they use an Oaxaca-Blinder decomposition method to “measure the contribution of different factors” (attributes and positions) to the gender compensation gap. 

Findings

The results show that “the quota had a positive effect” by raising the share of female directors in boardrooms. However, the access to key positions was limited to these rookie female directors. “They have had on average less committee memberships and chairs” than rookie and non-rookie males, pointing to a “positional segregation”. These results highlight the “persistence of negative stereotypes” around women in leadership positions and point to a “second, inner glass ceiling”.  As a result of positional segregation, these new female directors also suffered from a compensation gap. The results of the Oaxaca-Blinder decomposition indicate that the within-firm gender fees gap increased from 3.4 percent in the pre-quota period to 5.5 percent in the post-quota period. 

In terms of policy implications, the results suggest that politicians and practitioners should focus on granting access of female directors to important decision-making positions such as monitoring committees within boards. However, the results establishing the non-efficiency of the quotas in eliminating positional segregation and compensation gap within boards, are demonstrated only on the short run. Future research can focus on examining the impact of gender quotas on the long run where the rookie female directors might be able to secure their positions.