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Gender equality within boards: comparing quota and soft law

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Abstract

In 2011, Britain and France introduced affirmative action policies aiming at improving board gender mix in listed companies. While the reforms were similar in terms of target and timing, Britain opted for a ‘soft law’ (comply or explain) approach, while France enacted a mandatory quota. Using difference-in-differences analyses, we examine the differential impact of these two reforms on board composition and on women empowerment within boards. We first show that the quota has been associated with a more rapid adjustment of the gender mix without significant disruptive effects on board composition. However, we report that the quota has induced a more limited access of women to monitoring committees within boards, relative to soft law. As these committees are the most influential, this evidence shows that the quota came at a cost when considering within-board women’s influence.

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Notes

  1. For instance, considering the French quota, Nekhili et al. (2020) report that the reform is associated with a reduction in audit fees, while Nekhili et al. (2022) document a decrease in related-party transactions—as women are often directly involved in the board monitoring function.

  2. Actually, the data clearly support this assumption of a linear adjustment in the French case: the average share of women reached 30% in 2015, 34% in 2016 and 39% in 2017. There is no evidence of French firms front-loading or slowing down their adjustment. We are therefore confident that our empirical analysis does not capture differences in the pattern/timing of the required adjustments and that observed differences between British and French companies can be imputed to the regulatory approaches (quota versus soft law) adopted in the two countries.

  3. As such, we consider in this study non-binding quotas (i.e. without legal sanction) as adopted by Spain and Iceland to be soft law (Mateos de Cabo et al., 2019). For a general overview of the different board gender quotas enacted in Europe, see Mensi-Klarbach and Seierstad (2020).

  4. Soare et al. (2022) also report a stability in board size following the implementation of a gender quota in Belgium.

  5. For a similar approach, see e.g. Guceri and Li (2019).

  6. The results—available upon request—of the static difference-in-differences models [2] yield similar, consistent conclusions.

  7. Full results are available upon request.

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Acknowledgements

This project benefited from research assistance by Sergey Uzhegov. We thank seminar participants at the Society for the Advancement in Socio-Economics (SASE) 2018 Conference, the International Labour and Employment Relations Association (ILERA) 2018 Conference, the World Finance and Banking 2020 (virtual) Symposium and the 2023 Sorbonne Alliance workshop on Women and finance. The usual disclaimer applies.

Funding

This work was supported by the Research Program on Law and Justice of the French Ministry of Justice [research funding 215.01.12.15]. This funding source had no involvement in the study design, in the collection, analysis and interpretation of the data, nor in the writing of the manuscript and in the decision to submit it for publication.

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Authors and Affiliations

  1. EconomiX (UMR 7235), UPL, Université Paris Nanterre, 200 Avenue de la République, 92001, Nanterre, France

    Sophie Harnay & Fabienne Llense

  2. LADYSS (UMR 7533), Université Paris Cité, 8 Place Paul Ricoeur, 75013, Paris, France

    Antoine Rebérioux

  3. Département d’économie, Ecole Polytechnique, Route de Saclay, 91128, Palaiseau Cedex, France

    Gwenaël Roudaut

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  1. Sophie Harnay
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Harnay, S., Llense, F., Rebérioux, A. et al. Gender equality within boards: comparing quota and soft law. Eur J Law Econ (2024). https://doi.org/10.1007/s10657-024-09795-y

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