This study examines how board diversity and affirmative actions impact board dynamics, focusing on the Italian gender quota law of 2011. Using a staggered difference-in-differences methodology, we find that increased female representation on boards reduces firms’ likelihood of investing in countries with wider gender gaps. Complementary experimental evidence reveals that women directors exhibit a stronger preference for gender-equal investments, driven by normative commitments to gender equality rather than differences in risk aversion, personality, or career-related concerns. Our findings contribute to corporate governance literature by demonstrating how exogenous changes in board composition influence strategic decision-making and investment patterns. Additionally, we show that affirmative action policies, while not directly impacting firm value or market reactions, alter decision-making processes in ways that may shape firms’ long-term value creation. The study also highlights how minority group members, when adequately represented, can elevate awareness of group-sensitive issues and influence organizational outcomes. These findings underline the nuanced implications of diversity and affirmative actions for firms and institutions, warranting further research on their broader effects.
