Frankfurt School of Finance and Management, Germany
Firms face increasing pressure from external stakeholders to enhance board diversity, particularly gender diversity. Skeptics argue that prioritizing gender diversity may come at the expense of director qualifications. Using detailed data on director skills, we hypothesize and find that boards are becoming more skilled over time, with female independent directors, on average, possessing more skills—especially more distinctive skills—than their male counterparts. Additionally, shareholders exhibit stronger support for female independent directors, even beyond the skills they contribute to their boards, suggesting that they value female directors independent of their skills contribution, rather than solely because of their skills contribution. We contribute to the corporate governance literature by demonstrating that shareholders approve of female directors both because they possess valuable skills and because they are women. In addition, our findings provide robust evidence that female directors are far more than diversity, equity, and inclusion (DEI) hires.
