Gender quota inside the boardroom: Female directors as new key players? Pr. Antoine Rebérioux (Univ. Paris Diderot, LADYSS) Dr. Gwenaël Roudaut (Ecole Polytechnique) ASSA – AEA Conference Chicago, 2017 Good morning everybody, I am G. R. associate researcher at Ecole Polytechnique With my co-author Antoine Reberioux we analyze the implementation of the French gender quota in the boardroom.

Women inside the boardroom Low representation of women inside the boardroom From R. B. Adams (2016) Women on boards: The superheroes of tomorrow? The Leadership Quaterly, 27(3), 371-386 Why are we interested in this question? Gender diversity inside the boardroom is not only a question of corporate governance but first of all a social question. It should promote a more gender balanced economy by provinding some models to young women and also promoting equal opportunity based on experiences and qualifications. Moreover, gender diversity should improve the quality of the corporate governance in many ways. But without any public policy the share of women inside the boardroom is so low in 2009, the share of female directors was under 10 %! Why foster female representation inside the boardroom? Society Gender equality Role model Firm Quality of board Glass-ceiling

Voluntary vs. legislative approaches Code of corporate Governance Quota From R. B. Adams and T. Kirchmaier (2015) Barriers to Boardrooms, Working paper, SSRN Mixed effects on corporate governance and performance Two appraoches are competing at least in Europe The volontary approache and the legislative approach It is really hard to measure the real impact of gender diversity Fist even with an natural experiment there is an endogeneous biais Director selection Board functioning Firm performance Regulation on gender

Contribution Do Male and Female directors have the same role inside the boardroom before and after a gender quota? Do Male and female directors have the same characteristics? Director selection Do Male and female directors have the same role (committes)? Board functioning Director fees as a measure of director value Overall role of director The objective of the paper is to understand what are the costs and the benefits of a gender quota beyond the diversity performance such as Ferreura et al do on the Explain the gender fees gap before/after the quota within the same boardroom

The French case – Quasi-natural experiment – Zimmerman Copé Law 2010 Debate January 2011 Adoption 2014 20% 2017 40% Firms: revenue > 50 M€ and > 500 employees Stable board size: Substituting men by women Fees fully disclosed at director level in the annual reports The French quota. The debate at the parlamient was in 2010 and the law finally passed in January 2011 with a first target in 2014 of 20% and a second target of 40% in 2017. On the graoh you see the

Data Sample: French SBF120 companies Two periods: before (2006-2009) and after (2010-2014) Directors : individual characteristics, education, professional experience, role inside the boardroom Between 3 and 18 directors, around 7 meetings per year Supervisory board (24%), One–tier board without duality (24%) Committees : 111 firms, 1,498 directors and 7,904 director-firm-year obs. (exclusion of insiders, state’ and employees’ representatives) Audit Compensation/Nomination Advice % Firms 97 95 60

Directors’ fees Director fees: fixed and variable, depending on function (chairman, vice-chairman, …) committees Attendance (per meeting) 2006-2014 SBF120 Women : 45 k€ Men : 43 k€ (in €) Strong divergence among firms to compensate directors (size, board structure) Ratio of director’ fees with respect to the average director fees

Oaxaca-Blinder decomposition Factors explaining wage difference Segregation within positions Discrimination Unobservable characteristics

Gender gap inside the boardroom Gender gap = individual characteristics (1/3) + monitoring committees (2/3)

What happens to seasoned directors? Still an inner glass-ceiling to reach audit membership and chairing

Conclusion Before quota After quota Whole period Seasoned females 3.7%   Before quota After quota Whole period Seasoned females 3.7% 2.3% 2.6% Unseasoned females - 12% All 5.7% 5% Pools of directors slightly different and Inner glass ceiling for major committees positional gender segregation What is the impact on corporate performances? Is-it a short-term or long-term issue? What is the temporal dynamic? Investigate the costs and benefits of a gender quota on director selection and board functioning indicators –such as turnover in Ferreira et al. (2016) and board composition in Bøhren and Staubo (2014)

Difference in individual characteristics More international and less connected through the Grande Ecole network Fewer financial experts but younger people More independent but less industry-expert No predictable impact on corporate governance

Role inside the boardroom

Understanding directors’ fees