Director Fit Matters: Evidence from Board Gender Quota in France

Honggang Qiu; Lucia Gao; Rey Dang; L’Hocine Houanti; Linh-Chi Vo

doi:10.37725/mgmt.2025.10501

Honggang Qiu Department of Accounting, Economics & Finance, Framingham State University, Framingham, MA, USA
Lucia Gao College of Management, University of Massachusetts Boston, Boston, MA, USA
Rey Dang Istec Business School, Paris, France
L’Hocine Houanti Department of Economics, Territories and Sustainable Development, EM Normandie Business School, Métis-Lab, Clichy, France
Linh-Chi Vo UCLy (Lyon Catholic University), ESDES, Lyon, France; and UCLy (Lyon Catholic University), UR CONFLUENCE : Sciences et Humanités (EA1598), Lyon, France https://orcid.org/0000-0002-5792-3063

DOI: https://doi.org/10.37725/mgmt.2025.10501

Keywords: Board gender diversity, Gender quota, Firm performance, France

Abstract

There are three opposing perspectives regarding the contribution of board gender diversity to the firm’s financial performance (FP): positive impact, negative impact, and no relationship. Scholars have suggested several factors explaining these contradictory results. However, a significant omission is regarding how the board’s social dynamics shape the contribution of female directors to board decision-making, and ultimately to the firm’s FP. Our study attends to this issue by employing the theories of similarity-attraction, social identity, and person-group fit. Using the board gender quota law in France as an exogenous policy shock, we find a differential negative cross-country impact of women on corporate boards on FP (measured either by Tobin’s Q or return-on-assets) after the introduction of the gender quota. This impact is explained by the fit between new female directors and existing directors, which is defined as the similarity between them in terms of demographics (age and nationality), human capital (top executive, functional and industrial background), and social capital (educational and elite school background). Overall, our results suggest that a decrease in fit of the female directors following the gender quota contributed to a negative effect of women on boards on FP. We shed new light on the challenge of leveraging board gender diversity by offering a new explanation for the contradictory empirical results related to women on corporate boards and FP.

Downloads

Download data is not yet available.

Author Biographies

Honggang Qiu, Department of Accounting, Economics & Finance, Framingham State University, Framingham, MA, USA

Honggang (Hugh) Qiu is assistant professor in Department of Accounting, Economics & Finance, Framingham State University. He received an MBA from Boston College, a PhD in business administration from the University of Massachusetts Boston, and a PhD in economics from the University of York. He has many years of experience in the private equity industry. His research interests include analysts’ forecasts, firm valuation, the representation of women on corporate boards, and CEO compensation.

Lucia Gao, College of Management, University of Massachusetts Boston, Boston, MA, USA

Lucia Gao is professor of finance at the University of Massachusetts Boston. Her research interests include corporate finance, corporate governance, and corporate social responsibility, with a particular emphasis on the intersection of finance and sustainability. Her work has been published in the Journal of Corporate Finance, Global Finance Journal, Accounting & Finance, and the International Journal of Managerial Finance, among others. She has organized conferences and served as a co-editor for special issues on corporate social responsibility.

Rey Dang, Istec Business School, Paris, France

Rey Dang is associate professor of finance at Istec Business School Paris. His primary research interests fall at the intersection of finance, including CSR, corporate governance, including board composition, diversity, including women on boards, and entrepreneurship, including crowdfunding.

L’Hocine Houanti, Department of Economics, Territories and Sustainable Development, EM Normandie Business School, Métis-Lab, Clichy, France

L’Hocine Houanti is associate professor in economics and CSR at EM Normandie Business School and member of Métis lab. He received a PhD in economy from the University of Perpignan, France. He works on issues related to corporate social responsibility and sustainable development, as well as gender diversity and responsible finance. He also works with companies to understand the various issues related to CSR and its implementation in processes and functions, particularly in terms of governance.

Linh-Chi Vo, UCLy (Lyon Catholic University), ESDES, Lyon, France; and UCLy (Lyon Catholic University), UR CONFLUENCE : Sciences et Humanités (EA1598), Lyon, France

Linh-Chi Vo is Associate Dean for Research at ESDES Lyon Business School, UCLy. She is also professor of strategic management. She obtained her PhD at École centrale Paris. Her research interest are pragmatist philosophy, microfoundations of CSR, and gender studies. Her research has been published in journals such as Organization Studies, Human Relations, and Journal of Organizational Behavior, among others.

References

Adams, R. B., Akyol, A. C., & Verwijmeren, P. (2018). Director skill sets. Journal of Financial Economics, 130(3), 641–662. https://doi.org/10.1016/j.jfineco.2018.04.010

Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291–309. https://doi.org/10.1016/j.jfineco.2008.10.007

Ahern, K. R., & Dittmar, A. K. (2012). The changing of the boards: The impact on firm valuation of mandated female board representation. The Quarterly Journal of Economics, 127(1), 137–197. https://doi.org/10.1093/qje/qjr049

Allen, A., & Wahid, A. S. (2024). Regulating gender diversity: Evidence from California Senate Bill 826. Management Science, 70(4), 2023–2046. https://doi.org/10.1287/mnsc.2023.4825

Ashforth, B. E., & Mael, F. (1989). Social identity theory and the organization. Academy of Management Review, 14(1), 20–39. https://doi.org/10.5465/amr.1989.4278999

Barber, B. M., & Odean, T. (2001). Boys will be boys: Gender, overconfidence, and common stock investment. Quarterly Journal of Economics, 116(1), 261–292. https://doi.org/10.1162/003355301556400

Bennouri, M., Chtioui, T., Nagati, H., & Nekhili, M. (2018). Female board directorship and firm performance: What really matters? Journal of Banking & Finance, 88(March), 267–291. https://doi.org/10.1016/j.jbankfin.2017.12.010

Bertrand, M., Black, S. E., Jensen, S., & Lleras-Muney, A. (2019). Breaking the glass ceiling? The effect of board quotas on female labour market outcomes in Norway. The Review of Economic Studies, 86(1), 191–239. https://doi.org/10.1093/restud/rdy032

Bertrand, M., Duflo, E., & Mullainathan, S. (2004). How much should we trust differences-in-differences estimates? The Quarterly Journal of Economics, 119(1), 249–275. https://doi.org/10.1162/003355304772839588

Bøhren, Ø., & Staubo, S. (2014). Does mandatory gender balance work? Changing organizational form to avoid board upheaval. Journal of Corporate Finance, 28(October), 152–168. https://doi.org/10.1016/j.jcorpfin.2013.12.005

Bourdieu, P. (1996). The state nobility: Elite schools in the field of power [trans. L. C. Clough]. Stanford University Press.

Byrne, D. E. (1971). The attraction paradigm. Academic Press.

Byrnes, J. P., Miller, D. C., & Schafer, W. D. (1999). Gender differences in risk taking: A meta-analysis. Psychological Bulletin, 125(3), 367–383. https://doi.org/10.1037/0033-2909.125.3.367

Campbell, K., & Mínguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83, 435–451. https://doi.org/10.1007/s10551-007-9630-y

Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin’s Q. Financial Management, 23(3), 70–74. https://doi.org/10.2307/3665623

Comi, S., Grasseni, M., Origo, F., & Pagani, L. (2020). Where women make a difference: Gender quotas and firms’ performance in three European countries. ILR Review, 73(3), 768–793. https://doi.org/10.1177/0019793919846450

Conyon, M. J., & He, L. (2017). Firm performance and boardroom gender diversity: A quantile regression approach. Journal of Business Research, 79(October), 198–211. https://doi.org/10.1016/j.jbusres.2017.02.006

Dale-Olsen, H., Schøne, P., & Verner, M. (2013). Diversity among Norwegian boards of directors: Does a quota for women improve firm performance? Feminist Economics, 19(4), 110–135. https://doi.org/10.1080/13545701.2013.830188

De Anca, C., & Gabaldon, P. (2014). The media impact of board member appointments in Spanish-listed companies: A gender perspective. Journal of Business Ethics, 122(3), 425–438. https://doi.org/10.1007/s10551-013-1768-1

Dezsö, C. L., & Ross, D. G. (2012). Does female representation in top management improve firm performance? A panel data investigation. Strategic Management Journal, 33(9), 1072–1089. https://doi.org/10.1002/smj.1955

Eberhart, A. C., Maxwell, W. F., & Siddique, A. R. (2004). An examination of long-term abnormal stock returns and operating performance following R&D increases. The Journal of Finance, 59(2), 623–650. https://doi.org/10.1111/j.1540-6261.2004.00644.x

Eckbo, B. E., Nygaard, K., & Thorburn, K. S. (2022). Valuation effects of Norway’s board gender-quota law revisited. Management Science, 68(6), 4112–4134. https://doi.org/10.1287/mnsc.2021.4031

Fama, E. F., & French, K. R. (1997). Industry costs of equity. Journal of Financial Economics, 43(2), 153–193. https://doi.org/10.1016/S0304-405X(96)00896-3

Fauver, L., Huang, M., Taboada, A. G., & Wang, E. J. (2022). Boardroom gender diversity reforms and institutional monitoring: Global evidence. Review of Accounting Studies, 29(1), 621–664. https://doi.org/10.1007/s11142-022-09710-3

Ferrari, G., Ferraro, V., Profeta, P., & Pronzato, C. (2022). Do board gender quotas matter? Selection, performance, and stock market effects. Management Science, 68(8), 5618–5643. https://doi.org/10.1287/mnsc.2021.4200

Ferreira, D. (2010). Board diversity. In H. K. Baker & R. Anderson (Eds.), Corporate Governance: A synthesis of theory, research, and practice (pp. 225–242). Wiley.

Ferreira, D. (2015). Board diversity: Should we trust research to inform policy? Corporate Governance: An International Review, 23(2), 108–111. https://doi.org/10.1111/corg.12092

Ferreira, D., Ginglinger, E., Laguna, M.-A., & Skalli, Y. (2017). Closing the gap: Board gender quotas and hiring practices [Working paper, No. 520/2017]. The European Corporate Governance Institute (ECGI) – Finance Working Paper Series.

Frink, D. D., Robinson, R. K., Reithel, B., Arthur, M. M., Ammeter, A. P., Ferris, G. R., Kaplan, D. M., & Morrisette, H. S. (2003). Gender demography and organization performance: A two-study investigation with convergence. Group & Organization Management, 28(1), 127–147. https://doi.org/10.1177/1059601102250025

Gabaldon, P., De Anca, C., Mateos de Cabo, R., & Gimeno, R. (2016). Searching for women on boards: An analysis from the supply and demand perspective. Corporate Governance: An International Review, 24(3), 371–385. https://doi.org/10.1111/corg.12141

Ginglinger, E., & Raskopf, C. (2023). Women directors and E&S performance: Evidence from board gender quotas. Journal of Corporate Finance, 83(December), 102496. https://doi.org/10.1016/j.jcorpfin.2023.102496

Gordini, N., & Rancati, E. (2017). Gender diversity in the Italian boardroom and firm financial performance. Management Research Review, 40(1), 75–94. https://doi.org/10.1108/MRR-02-2016-0039

Graham, M. E., Belliveau, M. A., & Hotchkiss, J. L. (2017). The view at the top or signing at the bottom? Workplace diversity responsibility and women’s representation in management. Industrial and Labor Relations Review, 70(1), 223–258. https://doi.org/10.1177/0019793916668879

Greene, D., Intintoli, V. J., & Kahle, K. M. (2020). Do board gender quotas affect firm value? Evidence from California Senate Bill No. 826. Journal of Corporate Finance, 60(February), 101526. https://doi.org/10.1016/j.jcorpfin.2019.101526

Gregorič, A., Oxelheim, L., Randøy, T., & Thomsen, S. (2017). Resistance to change in the corporate elite: Female directors’ appointments onto Nordic boards. Journal of Business Ethics, 141, 267–287. https://doi.org/10.1007/s10551-015-2703-4

Hambrick, D. C., Cho, T. S., & Chen, M.-J. (1996). The influence of top management team heterogeneity on firms’ competitive moves. Administrative Science Quarterly, 41(4), 659–684. https://doi.org/10.2307/2393871

Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organizations as a reflection of its top managers. Academy of Management Review, 9(2), 193–206. https://doi.org/10.2307/258434

Havrylyshyn, A., Schepker, D. J., & Nyberg, A. J. (2023). In the club? How categorization and contact impact the board gender diversity-firm performance relationship. Journal of Business Ethics, 184(2), 353–374. https://doi.org/10.1007/s10551-022-05168-0

Hillman, A. J., Shropshire, C., & Cannella, A. A. (2007). Organizational predictors of women on corporate boards. Academy of Management Journal, 50(4), 941–952. https://doi.org/10.5465/amj.2007.26279222

Honoré, F., Munari, F., & Van Pottelsberghe de La Potterie, B. (2015). Corporate governance practices and companies’ R&D intensity: Evidence from European countries. Research Policy, 44(2), 533–543. https://doi.org/10.1016/j.respol.2014.10.016

Hoobler, J. M., Masterson, C. R., Nkomo, S. M., & Michel, E. J. (2018). The business case for women leaders: Meta-analysis, research critique, and path forward. Journal of Management, 44(6), 2473–2499. https://doi.org/10.1177/0149206316628643

Huang, S., & Hilary, G. (2018). Zombie board: Board tenure and firm performance. Journal of Accounting Research, 56(4), 1285–1329. https://doi.org/10.1111/1475-679X.12209

Hutchinson, M., & Gul, F. A. (2004). Investment opportunity set, corporate governance practices and firm performance. Journal of Corporate Finance, 10(4), 595–614. https://doi.org/10.1016/S0929-1199(03)00022-1

Johnson, S. G., Schnatterly, K., & Hill, A. D. (2013). Board composition beyond independence: Social capital, human capital, and demographics. Journal of Management, 39(1), 232–262. https://doi.org/10.1177/0149206312463938

Kim, D., & Starks, L. T. (2016). Gender diversity on corporate boards: Do women contribute unique skills? The American Economic Review, 106(5), 267–271. https://www.doi.org/10.1257/aer.p20161032

Kirsch, A. (2018). The gender composition of corporate boards: A review and research agenda. The Leadership Quarterly, 29(2), 346–364. https://doi.org/10.1016/j.leaqua.2017.06.001

Kristof, A. L. (1996). Person-organization fit: An integrative review of its conceptualizations, measurement, and implications. Personnel Psychology, 49(1), 1–49. https://doi.org/10.1111/j.1744-6570.1996.tb01790.x

Labelle, R., Francœur, C., & Lakhal, F. (2015). To regulate or not to regulate? Early evidence on the means used around the world to promote gender diversity in the boardroom. Gender, Work & Organization, 22(4), 339–363. https://doi.org/10.1111/gwao.12091

Liu, Y., Wei, Z., & Xie, F. (2014). Do women directors improve firm performance in China? Journal of Corporate Finance, 28(October), 169–184. https://doi.org/10.1016/j.jcorpfin.2013.11.016

Martínez-García, I., Terjesen, S., & Gómez-Ansón, S. (2022). Board gender diversity codes, quotas and threats of supranational legislation: Impact on director characteristics and corporate outcomes. British Journal of Management, 33(2), 753–783. https://doi.org/10.1111/1467-8551.12517

Matsa, D. A., & Miller, A. R. (2013). A female style in corporate leadership? Evidence from quotas. American Economic Journal: Applied economics, 5(3), 136–169. https://www.doi.org/10.1257/app.5.3.136

Miller, D., & Xu, X. (2020). CEO long-term orientation and elite university education. Strategic Organization, 18(4), 520–546. https://doi.org/10.1177/14761270198407

Nguyen, B. D. (2012). Does the Rolodex matter? Corporate elite’s small world and the effectiveness of boards of directors. Management Science, 58(2), 236–252. https://doi.org/10.1287/mnsc.1110.1457

Nguyen, T. H. H., Ntim, C. G., & Malagila, J. K. (2020). Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda. International Review of Financial Analysis, 71(October), 101554. https://doi.org/10.1016/j.irfa.2020.101554

Pandey, N., Kumar, S., Post, C., Goodell, J. W., & García-Ramos, R. (2023). Board gender diversity and firm performance: A complexity theory perspective. Asia Pacific Journal of Management, 40(3), 1289–1320. https://doi.org/10.1007/s10490-022-09817-w

Post, C., & Byron, K. (2015). Women on boards and firm financial performance: A meta-analysis. Academy of Management Journal, 58(5), 1546–1571. https://doi.org/10.5465/amj.2013.0319

Reguera-Alvarado, N., De Fuentes, P., & Laffarga, J. (2017). Does board gender diversity influence financial performance? Evidence from Spain. Journal of Business Ethics, 141(2), 337–350. https://doi.org/10.1007/s10551-015-2735-9

Roodman, D. (2009). A note on the theme of too many instruments. Oxford Bulletin of Economics and Statistics, 71(1), 135–158. https://doi.org/10.1111/j.1468-0084.2008.00542.x

Sabatier, M. (2015). A women’s boom in the boardroom: Effects on performance? Applied Economics, 47(26), 2717–2727. https://doi.org/10.1080/00036846.2015.1008774

Sarang, A. A. A., Aubert, N., & Hollandts, X. (2024). Board gender diversity and the cost of equity: What difference does gender quota legislation make? International Journal of Finance & Economics, 29(2), 2193–2213. https://doi.org/10.1002/ijfe.2774

Seong, J. Y., Kristof-Brown, A. L., Park, W.-W., Hong, D.-S., & Shin, Y. (2015). Person-group fit: Diversity antecedents, proximal outcomes, and performance at the group level. Journal of Management, 41(4), 1184–1213. https://doi.org/10.1177/0149206312453738

Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783. https://doi.org/10.1111/j.1540-6261.1997.tb04820.x

Sila, V., Gonzalez, A., & Hagendorff, J. (2016). Women on board: Does boardroom gender diversity affect firm risk? Journal of Corporate Finance, 36(February), 26–53. https://doi.org/10.1016/j.jcorpfin.2015.10.003

Singh, V., Terjesen, S., & Vinnicombe, S. (2008). Newly appointed directors in the boardroom: How do women and men differ? European Management Journal, 26(1), 48–58. https://doi.org/10.1016/j.emj.2007.10.002

Sraer, D., & Thesmar, D. (2007). Performance and behavior of family firms: Evidence from the French stock market. Journal of the European Economic Association, 5(4), 709–751. https://doi.org/10.1162/JEEA.2007.5.4.709

Tajfel, H., & Turner, J. C. (1986). The social identity theory of intergroup behaviour. In S. Worchel & W. G. Austin (Eds.), Psychology of Intergroup Relations (pp. 7–24). Nelson-Hall.

Tasheva, S., & Hillman, A. J. (2019). Integrating diversity at different levels: Multilevel human capital, social capital, and demographic diversity and their implications for team effectiveness. Academy of Management Review, 44(4), 746–765. https://doi.org/10.5465/amr.2015.0396

Torchia, M., Calabrò, A., & Huse, M. (2011). Women directors on corporate boards: From tokenism to critical mass. Journal of Business Ethics, 102(2), 299–317. https://doi.org/10.1007/s10551-011-0815-z

Tsui, A. S., & O’Reilly, C. A. (1989). Beyond simple demographic effects: The importance of relational demography in superior-subordinate dyads. Academy of Management Journal, 32(2), 402–423. https://doi.org/10.5465/256368

Westphal, J. D., & Stern, I. (2006). The other pathway to the boardroom: Interpersonal influence behavior as a substitute for elite credentials and majority status in obtaining board appointments. Administrative Science Quarterly, 51(2), 169–204. https://doi.org/10.2189/asqu.51.2.169

Westphal, J. D., & Zajac, E. J. (2013). A behavioral theory of corporate governance: Explicating the mechanisms of socially situated and socially constituted agency. Academy of Management Annals, 7(1), 607–661. https://doi.org/10.1080/19416520.2013.783669

Williams, K. Y., & O’Reilly, C. A. (1998). Demography and diversity in organizations: A review of 40 years of research. In B. M. Staw & L. L. Cummings (Eds.), Research in organizational behavior (Vol. 20, pp. 77–140). Elsevier.

Wintoki, M. B., Linck, J. S., & Netter, J. M. (2012). Endogeneity and the dynamics of internal corporate governance. Journal of Financial Economics, 105(3), 581–606. https://doi.org/10.1016/j.jfineco.2012.03.005

Yang, P., Riepe, J., Moser, K., Pull, K., & Terjesen, S. (2019). Women directors, firm performance, and firm risk: A causal perspective. The Leadership Quarterly, 30(5), 101297. https://doi.org/10.1016/j.leaqua.2019.05.004

Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185–211. https://doi.org/10.1016/0304-405X(95)00844-5

Zattoni, A., Leventis, S., Van Ees, H., & De Masi, S. (2023). Board diversity’s antecedents and consequences: A review and research agenda. The Leadership Quarterly, 34(1), 101659.

Zhu, D. H., Shen, W., & Hillman, A. J. (2014). Recategorization into the in-group: The appointment of demographically different new directors and their subsequent positions on corporate boards. Administrative Science Quarterly, 59(2), 240–270. https://doi.org/10.1177/0001839214530951