Activists and Advocates: The Effects of Shareholder Activism on Female Board Representation

Despite decades of social and organizational commitments to increasing boardroom gender diversity, women are still underrepresented on U.S. boards. In this paper, we explore an important antecedent of female board representation: shareholder activism. Drawing on institutional theory, we predict that firms that are targeted by shareholder activists due to the lack of women on boards are likely to improve gender diversity in their boardroom to earn more legitimacy and protect themselves from further pressures. Using shareholder proposals on board diversity for S&P 1500 firms from 1997 to 2013, we found that firms that received shareholder proposals on board diversity tend to increase the number of women on their boards. Also, we found that the effect of shareholder proposals is weaker when the firm has a female CEO and demonstrates strong performance, because these organizational conditions are likely to provide them a shield that would make them less vulnerable from external pressure from shareholder activ...