Does board gender diversity reduce workplace sexual harassment?

• Published date: 01 September 2023
• Author: Shiu‐Yik Au,Andréanne Tremblay,Leyuan You
• Date: 01 September 2023
• DOI: http://doi.org/10.1111/corg.12496

ORIGINAL ARTICLE

Does board gender diversity reduce workplace sexual

harassment?

Shiu-Yik Au

1

| Andréanne Tremblay

2

| Leyuan You

3

1

Asper School of Business, University of

Manitoba, Winnipeg, Canada

2

Faculty of Business Administration, Université

Laval, Quebec City, Canada

3

McCoy College of Business Administration,

Texas State University, San Marcos, Texas,

USA

Correspondence

Leyuan You, McCoy College of Business

Administration, Texas State University, San

Marcos, TX 78666, USA.

Email: ly17@txstate.edu

Funding information

No funders available.

Abstract

Research Question/Issue: We contrast the predictions of gender socialization theory

and “fem-power washing”(deceptively positioning as a firm promoting female

empowerment without any tangible actions) to investigate whether promoting

female directors on the board of directors associates with a reduction in the preva-

lence of firm-level workplace sexual harassment (SH).

Research Findings/Insights: We estimate the incidence rate of SH through textual

analysis of US employees' job reviews published online during the period 2011–

2021. We find that an increase of one female director is associated with a 21.81%

decrease in workplace SH and that firms with high board gender diversity synchro-

nize the reduction in SH with improved social policies (e.g., policies to better

employee relations, health and safety, or diversity challenges). Our results do not

support the fem-power washing theory but rather imply that nominating female

directors may have a profound impact on the firm's ethical culture.

Theoretical/Academic Implications: This study validates the ethical dimension of

corporate governance: Nominating female directors impacts a firm harassment cul-

ture and, by extension, a firm's ethical and corporate culture. This study adds to the

governance literature that debates the merits of board gender diversity by highlight-

ing an oft-ignored channel through which board diversity affects firm value: ethics

and corporate culture.

Practitioner/Policy Implications: For boards of directors, having more female direc-

tors can curb workplace SH, a behavior that is associated with a severe and lasting

negative effect on firm value. For practitioners, regulators, and the business commu-

nity, this study reinforces the merits of aiming towards more gender-balanced

boards.

KEYWORDS

board of directors, corporate governance, environmental, social, and governance (ESG) policies,

ethics, gender diversity, sexual harassment

Received: 16 December 2021 Revised: 23 August 2022 Accepted: 17 October 2022

DOI: 10.1111/corg.12496

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any

medium, provided the original work is properly cited and is not used for commercial purposes.

© 2022 The Authors. Corporate Governance: An International Review published by John Wiley & Sons Ltd.

718 Corp Govern Int Rev. 2023;31:718–736.

wileyonlinelibrary.com/journal/corg

We believe that reorganizing the Company [The Weinstein

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employeeswith dignity and respect.

1

Maria Contreras-Sweet, potential buyer of The

Weinstein Co.

1|INTRODUCTION

Over the past two decades, governments and regulatory bodies began

to institute gender quotas on corporate boards. In parallel, firms have

been increasingthe number of women on their boardof directors even

when not required by law. Such actions are based on the belief that

board genderdiversity promotes public interests (such as gender equal-

ity) and increases firm value. However, the empirical evidence offers

mixed results regarding the substantiality of the positive externalities

associated withboard gender diversity.In this paper, we study whether

board gender diversity creates positive social impact through the lens

of the oft-ignored channel of firms' ethical culture and, more specifi-

cally, through the lens of workplace sexual harassment. Workplace

sexual harassment is a specific, but particularly nefarious, behavior: It

has been associated with multiple negative personal and workplace

consequences,including increased employee turnover and absenteeism

and lower productivity (e.g., McDonald, 2012; Willness et al., 2007).

Furthermore,workplace sexual harassmentin corporations is also linked

to significantmarket value losses: Forinstance, Au et al. (2022) findthat

sexual harassment associateswith annual losses in shareholdervalue of

$0.8 to $1.4 billion,and Borelli-Kjaer et al. (2021) find average losses of

$450 millionover the 2 days surrounding theannouncement of a sexual

harassmentscandal.

In addition to these substantial losses in shareholder value, since the

vast majority of victims of workplace sexual harassment are women

(Pina & Gannon, 2012), sexual harassment remains one of the barriers to

gender equality. There are multiple barriers to women's career advance-

ment and satisfaction, including resistance to women's leadership

(Cortis & Cassar, 2005; Eagly & Carli, 2007), women's leadership style,

demands of family life, and underinvestment in social capital (Eagly &

Carli, 2007). However, we focus on workplace sexual harassment,

because it is possibly “one of the most damaging barriers to career

success and satisfaction of women”(Willness et al., 2007, p. 127). In a

mixed-method study, McLaughlin et al. (2017) find substantial long-term

negative effects of workplace sexual harassment on victims' career trajec-

tory and salary: Because many of the participants in the study leave thei r

job to escape from the sexual harassment, victims were typically earning

less 9 years after the initial sexual harassment situation.

Our motivation to examine workplace sexual harassment is

therefore the potential for substantive positive social externalities

associated with reducing workplace sexual harassment. By reducing

workplace sexual harassment and creating a more inclusive working

environment, firms have the opportunity to reduce one of the most

significant barriers to women's career advancement and satisfaction,

while also benefiting from a possibly more satisfied and more perma-

nent workforce, thus making the venture cost-effective. In addition,

sexual harassment is a particularly salient manifestation of a lacking

ethical culture and therefore offers a valid setting to examine whether

corporate governance impacts firm's ethical culture. More specifically,

we investigate whether board gender diversity contributes to a reduc-

tion in workplace sexual harassment or whether firms engage in “fem-

power washing”(similar to “greenwashing,”but for gender instead of

the environment).

2

Our theoretical framework is built on gender socialization theory

and is supported by empirical findings on the gender differences in

corporate decision making and leadership styles, which we assume

extend to directors. According to gender socialization theory, women

are socialized to be caring and more stakeholder oriented. They are

more long-term oriented, focus more on corporate social responsibil-

ity (CSR), promote employee benefits, and discourage unethical

behaviors (e.g., Adams et al., 2011; Briano-Turrent, 2022; García-

Sánchez et al., 2015; Shaukat et al., 2016). Women also tend to adopt

an interactive leadership style (Eagly & Carli, 2007), which allows them

to be more attuned to the sexual harassment problem than men.

On the other hand, the fem-power washing theory posits that

promoting female directors does not translate into concrete corporate

actions towards the reduction of sexual harassment. Firms nominating

female board members may perceive they have “done enough”to

promote workplace gender equality, thus providing no need to further

improve social policies (e.g., policies to improve employee relations,

human rights issues, or diversity issues) and reduce workplace sexual

harassment in particular. Alternatively, but not exclusively, female

directors in such firms may fear that adopting a typically feminine

behavior will reflect negatively on them or their capacities as directors

(Park & Westphal, 2013), which could explain their reluctance to pro-

mote diversity and implement sexual harassment-reducing actions

(Hekman et al., 2017).

To differentiate these two theories and, more specifically, to

examine whether nominating female directors leads to improvements

in firms' ethical culture, we examine whether higher board gender

diversity is associated with reduced workplace sexual harassment.

Focusing on female board members (FemaleBoard) offers a two-fold

advantage: First, García-Sánchez et al. (2015) show the importance of

boards of directors, but especially female directors, in establishing and

shaping corporations' ethics codes. Second, board gender diversity

offers more cross-sectional variation than other variables of gender

diversity, such as executive gender diversity, for instance. Therefore,

focusing on board gender diversity allows us to better identify a

potential causal link between gender diversity and workplace sexual

harassment.

While measuring board gender diversity is straightforward, identi-

fying workplace sexual harassment cases poses a challenge. We esti-

mate the incidence of firm-level sexual harassment by performing

textual analysis of online job reviews. We collect over 2.96 million job

reviews from Glassdoor.com and Indeed.com, at the time of writing

the two largest US career intelligence websites, between 2011 and

AU ET AL.719