Female directors on boards. The impact of faultlines on CSR reporting

Purpose: This paper analyzes the role of female directors on CSR disclosure. It assumes the existence of faultlines when studying gender diversity and classifies female directors into three categories: industry experts, advisors, and community leaders. It also examines the influence of the power of female directors as a moderator on the association between female director categories and CSR disclosure. Design/methodology/approach: The paper is based on a dynamic Generalized Method of Moments panel estimator which allows the control of unobservable heterogeneity and endogeneity and reduces estimation bias. Findings: Results confirm the double-sided nature of gender diversity, noting different behavior among female directors according to their experience and backgrounds. Moreover, the dominating owner position of female directors can balance and moderate the effect of female directors appointed for their technical knowledge or political and social ties. The results also confirm the necessity to not consider all women directors as a homogeneous group and explore the influence and interrelations of female faultlines on CSR disclosure. Practical implications: The paper highlights the need to consider the specific skills, expertise, and connections of female board members when analyzing the effect of board composition, and supports the view that firms should emphasize the unique human and social capital of directors to understand how boards impact on firm strategies. Specifically, we support the recommendations of the European Commission (2011) regarding the need to increase skills and expertise when selecting new non-executive female board members. Social implications: At a time when most governments are introducing active policies that require firms to nominate women to boards, the understanding of the consequences of women’s presence on boards and the interrelations between female power and the diverse categories of female directors is timely and important. Originality/value: This is the first paper that provides empirical evidence to the scarcelystudied area of the human and social capital of female directors’ roles in CSR disclosure, providing an alternative view of the role of women in corporate board effectiveness