Women on corporate boards and sustainable development in the American and European markets: Is there a limit to gender policies?

Abstract

Many European countries enacted laws to promote effective gender equality in management positions. Moreover, investors increasingly consider the sustainable valuation of companies in their portfolio selection. Previous research demonstrates the positive relationship between female directors and corporate social performance. The aim of this study is twofold: we examine the extent to which this relationship remains positive according to the level of gender diversity and compare the behaviour in American and European markets, considering that the US has no gender quota. We apply a panel data methodology, with fixed effects, to examine companies listed in the S&P 500 and Euro Stoxx 300 indices during 2015–2019. The results show the increasing influence of women directors up to a limit, both in the American and European markets, and this influence is higher in Europe. This result implies that gender-diverse boards are favourable to the sustainable behaviour of companies. Therefore, policymakers should promote gender policies.