Gender Diversity Goals, Supply Constraints, and the Market for Seasoned Female Directors: The U.S. Evidence

We show that over the last decade, growing public pressure for board gender diversity and awareness of gender equality issues in the U.S. has manifested in “seasoned†female board members accumulating multiple board appointments at a rate faster than seasoned male directors. The larger firms have been the most active in attracting seasoned female directors, at the expense of the smaller firms. This has likely contributed to the smaller firms lagging behind the larger firms in the pursuit of more gender balance. Our evidence is highly consistent with “supply constraints†, as reflected in high costs of recruiting first-time female directors, which the larger firms manage to avoid and the smaller firms find too costly to incur. Gender quota mandates are likely to expose the smaller firms even more to these costs; however, the absence of mandates may also not be optimal. Given growing public pressure, it may be necessary to mandate that larger firms maintain the ratio of first-time to seasoned female appointments above some level.