The impact of regulating board gender diversity on the trickle-down effect: an attention-based view

Abstract

Research question/issue: Using an attention-based perspective of the firm, this study explores whether regulatory targets mandating women’s representation on corporate boards change the coordination of board and senior management appointment outcomes. Research findings/insights: Using a natural experiment design, in which British publicly traded firms encountered an exogenous regulatory shock on board gender composition, we uncover that regulation caused a disconnect of outcomes between the corporate board and senior management team, and, as a consequence, the trickle-down effect from appointing women at board level was removed after regulatory targets were implemented. Theoretical/academic implications: The study adds to literature on attention, providing empirical evidence that lower levels of attentional coherence are observed between the corporate board and senior management team after a major exogenous shock in the firm’s external environment. Departing form neo-institutional research investigating women in leadership and corporate governance, this study puts forward the attentional approach to explore the wider impact of legislating women’s representation on corporate boards. Practitioner/policy implications: Shifting board level attention towards the target of external regulatory requirements, and away from the internal environment, has an adverse impact on positive trickle-down effects once observed from appointing women to board level positions.