Boardroom Gender Diversity Reforms and Institutional Monitoring : Global Evidence

We examine how boardroom gender diversity reforms impact the monitoring role of institutional investors. Using reforms from 25 countries that aim to improve gender diversity on boards, we find that the reforms increase the association between institutional ownership and subsequent female directorships for foreign investors, but not for domestic investors. This result is driven by foreign institutional investors from countries with a high social equity norm and by foreign pension funds and independent institutions. Furthermore, firms experience improved valuation and profitability following reform compliance. Overall, our findings suggest that boardroom gender diversity reforms empower socially conscious foreign institutional investors to drive value enhancing governance change