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Double-edged effect of female directors on strategic change: more monitoring but less risk-taking

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Abstract

Research suggests that female directors can affect strategic change by changing board dynamics via gender diversity; however, this is only part of the story. In this study, we examine new mechanisms underlying the link between female directors and strategic change through the lens of gender-specific action tendencies. In particular, we explore the mediating effects of compensation monitoring of top managers and corporate risk-taking to explain the different pathways between female directors and strategic change. Using a sample of Chinese listed manufacturing firms over the 2010–2016 period, we find that female directors can indirectly improve strategic change via more effective monitoring of top manager compensation, but they can also inhibit strategic change indirectly via less risk-taking. These findings contribute to the literature by providing new insights into how female directors affect strategic change through the lens of gender-specific action tendencies.

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Data availability

The research data used to support the findings of this study are available from the corresponding author upon request.

Notes

  1. The independent and control variables were obtained from 2010 to 2016; the mediating variable was obtained from 2011 to 2017; the dependent variable was obtained from 2012 to 2018.

  2. Previous studies used the ratio of selling, general, and administrative (SGA) expenses to sales to measure nonproduction overhead. However, general expenses are not reported in annual reports of Chinese listed firms. Thus, nonproduction overhead is measured as the ratio of selling and administrative expenses to sales.

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Funding

This work was supported by the National Natural Science Foundation of China (Grant numbers 71902075, 71972061, 71802007, 72372002) and the Project of Humanities and Social Sciences, Chinese Ministry of Education (Grant number 23YJA630099).

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  1. Xiaoying Chang and Xiwei Yi contributed equally to this publication and are co-corresponding authors.

Authors and Affiliations

  1. School of Management, Lanzhou University, No. 222 South Tianshui Street, Lanzhou, Gansu Province, 730000, China

    Yu Wang

  2. School of Humanities, Social Sciences & Law, Harbin Institute of Technology, No. 92 West Dazhi Street, Harbin, Heilongjiang Province, 150001, China

    Xiaoying Chang

  3. Guanghua School of Management, Peking University, No.5 Yiheyuan Road, Haidian District, Beijing, 100000, China

    Xiwei Yi

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Wang, Y., Chang, X. & Yi, X. Double-edged effect of female directors on strategic change: more monitoring but less risk-taking. Asia Pac J Manag (2023). https://doi.org/10.1007/s10490-023-09938-w

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