Recent research by Dr Kumari Ranjeeni and Dr Dharmendra Naidu suggests that investors undervalue firms with female directors due to gender role stereotype. Our research paper is published as open access in ABACUS.
Our research paper is available for free downloading and reading in ABACUS, Click Here!
Our study argues that investors detrimentally stereotype female directors because they have communal qualities, such as being inclusive, selfless, sensitive, and friendly. These qualities do not align with the agentic qualities expected for leadership roles. However, extant research has shown that female directors and gender diverse boards enhance corporate governance, board monitoring and firm performance. See for example, our recent research published as an open access in Journal of Business Ethics, Click Here!
The question that follows is: How do we address the negative stereotyping of female directors?
This question is particularly important because some countries are mandating the number of female directors on corporate boards. This strict requirement is timely but it can be very costly for firms and its stakeholders if investors continue to negatively stereotype female directors and under value firms with female directors.
The authors draw from prior research that suggests that “stereotypes change as new pieces of disconfirming information are received”. The study investigates whether greater awareness about the benefits of female directors help in minimizing the detrimental stereotyping of female directors.
Using media and research coverage of female directors as proxies of increasing awareness about female directors, the study shows that “the detrimental stereotyping of female directors is less pronounced after investors become more aware about the benefits of female directors”. The study finds some evidence suggesting that the detrimental stereotyping of female directors continues, but at a lower level.
The study concludes as follows:
“Therefore, our findings imply that more investor awareness is needed in the future to further eradicate gender stereotyping of female directors.
Further, social role stereotype is a global issue and applies to various social roles including stereotypes based on race, ethnicity, nationality, and so on. Thus, our findings could be applied in other stereotypical settings whereby an increase in awareness may bring about a positive change in a stereotypical perception of such other social roles.
Also, our findings may be applied to other male dominated leadership contexts. This includes woman leaders such as managers, researchers, academics, heiress, and political leaders,” (Ranjeeni and Naidu, 2024).
References:
Ranjeeni, Kumari and Naidu, Dharmendra, Female Directors, Do Investors Undervalue Female Directors due to Gender Role Stereotype? Evidence from the United States. ABACUS (2024). Open Access. https://doi.org/10.1111/abac.12321
Naidu, D., Ranjeeni, K. Shhh… Do Gender-Diverse Boards Prioritize Product Market Concerns Over Capital Market Incentives? J Bus Ethics (2023). Open Access. https://doi.org/10.1007/s10551-023-05553-3
Comments