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The role of endogeneity in the relationship between board gender diversity and corporate social performance: evidence from a control function method

Author

Listed:
  • Rey Đặng

    (ISTEC - Institut supérieur des Sciences, Techniques et Economie Commerciales - ISTEC)

  • L'Hocine Houanti

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • Michel Simioni

    (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, UT - Université de Toulouse)

  • Jean-Michel Sahut

    (IDRAC Business school Lyon - Institut pour le Développement et la Recherche d'Action Commerciale - Université de Lyon)

Abstract

Due to a contrasting empirical literature, we revisit the influence of board gender diversity (BGD) on corporate social performance (CSP) by carefully considering the thorny issue of endogeneity, which plagues this matter. Building on stakeholder theory (Freeman, Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.; Freeman et al., Freeman et al., Organization Science 15:364–369, 2004), we used a correlated random effects (CRE) Chamberlain-Mundlak approach and Wooldridge's (Wooldridge, Journal of Human Resources 50:420–445, 2015) control function (CF) method to take into account the classical endogeneity issue (unobserved heterogeneity and reverse causality) (Adams, Adams, The Leadership Quarterly 27:371–386, 2016) and dynamic endogeneity (Wintoki et al., Wintoki et al., Journal of Financial Economics 105:581–606, 2012) in panel data setting. Using a sample from the 2020 Fortune 1000 list during the 2004–2020 period, we find that the impact of BGD is positive and significant on CSP. Additionally, we clearly show that the BGD-CSP relationship is endogenous and dynamic by nature. Consequently, this study sheds new light by highlighting (1) the importance of endogeneity, (2) the dynamic relationship between BGD and CSP, and (3) how combined FC-CRE approaches can alleviate these issues.

Suggested Citation

  • Rey Đặng & L'Hocine Houanti & Michel Simioni & Jean-Michel Sahut, 2023. "The role of endogeneity in the relationship between board gender diversity and corporate social performance: evidence from a control function method," Post-Print hal-04295800, HAL.
    • Handle: RePEc:hal:journl:hal-04295800
    DOI: 10.1007/s10479-023-05682-y
    as

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