Board gender diversity and corporate social irresponsibility in a dominant owner context

Abstract

The growing prominence of women directors has increased interest in their role infirms' social performance. However, knowledge of what impact female directorsmight have on corporate social irresponsibility (CSI) remains virtually non-existent.This study aims to fill this gap. Using a sample of 107 Spanish listed non-financialcompanies from the OSIRIS database (Bureau Van Dijk) for the period 2014–2022,together with alternative regression methods to account for endogeneity (2SLS, pro-pensity scoring matching and generalised method of moments), our results show aninverted U-shaped relationship between female directors and CSI. This supportsarguments that dominant owners might appoint a small number of female directorssymbolically to create a‘halo effect’or to enhance their public image and thus rein-force their entrenchment and divert attention away from CSI episodes. However, theappointment of a critical mass of female directors does evidence dominant ownercommitment to move away from irresponsible corporate practices, since the pres-ence of a larger number of female directors encourages the firm's ethical behaviourand increases the costs of penalising CSI episodes in the face of the firm's hypocriti-cal behaviour. This study contributes to the emerging literature on CSI by comple-menting the knowledge gained from studies on ethical behaviour in a concentratedownership setting. However, the study is not without limitations, especially in termsof the difficulty of measuring CSI episodes since, despite the work of the media,some socially irresponsible practices may remain hidden.