Do Board Gender Quotas Generate Horizontal Spillovers?
| Published date | 01 October 2023 |
| Author | Alessio Bongiovanni,Paola De Vincentiis,Alessandra Guariglia,Eleonora Isaia,Mariacristina Rossi |
| Date | 01 October 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12667 |
British Journal of Management, Vol. 34, 1851–1868 (2023)
DOI: 10.1111/1467-8551.12667
Do Board Gender Quotas Generate
Horizontal Spillovers?
Alessio Bongiovanni,1Paola De Vincentiis,1Alessandra Guariglia ,2
Eleonora Isaia1and Mariacristina Rossi1
1School of Management and Economics, University of Turin, Torino, 10134, Italy 2Birmingham Business
School, University of Birmingham, Edgbaston, B15 2TY, UK
Corresponding author email: a.guariglia@bham.ac.uk
Using a panel of unlisted Italian banks over the period 2006–2018, we examine the extent
to which a law that mandatorily introduced female quotas in the boards of Italian listed
companies in 2012 had spillover effects on the boards of unlisted banks, which were not
required to comply with the quota. Our results show that both the probability of having
at least one woman on the board and the proportion of women on the boards of unlisted
banks have been rising signicantly after the passing of the law.These ndings, which are
robust to estimating different specications and to using different estimation techniques,
suggest that the quota law contributed to generating a fairer attitude towards women
and, more in general, a change in social norms on gender equality. This may have, in
turn, generated isomorphic pressures on unlisted banks, inducing them to mimic the board
composition of their listed counterparts.
Introduction
Women are under-represented in several domains
worldwide. Economic participation and opportu-
nities represent one of the areas where the gen-
der gap remains the widest (World Economic Fo-
rum, 2018). Women have in fact to overcome
signicant obstacles in reaching managerial or
top positions in the workplace, as well as in sit-
ting on boards of directors (Hardoy, Schøne and
Østbakken, 2017; Oakley,2000; Ragins, Townsend
and Mattis, 1998).
According to the European Commission (2016):
‘Not takingadvantage of the skills of highlyquali-
ed women constitutes a waste of talent and a loss
of economic growth potential’. This is the reason
why the issue of female presence in the business
sector became part of the political agenda of the
European Union (EU), which has introducedvari-
ous board gender diversity quotas to overcomethis
market failure.A number of studies havelooked at
vertical spillover effects of these quotas on gender
diversity in management positions below board
level within quota-subjected companies. But do
these quotas also have horizontal spillover effects
beyond the rms that are obliged to follow them?
Horizontal spillovers could take place if the quota
laws lead to a change in social norms on gender
equality. This change could, in turn, generate pos-
itive externalities also on rms that are not sub-
ject to the quotas, which may prefer not to keep
distant from the new benchmark. To the best of
our knowledge, no previous literature has anal-
ysed whether, within a single country, board gen-
der quotas result in horizontal spillovers on gender
diversity in the boards of companies that are not
required to comply with the quotas. In this paper,
we ll this gap, focusingon a sample of Italian un-
listed banks.
Specically, we are the rst to investigate pos-
sible horizontal spillovers that the Golfo-Mosca
(GM) law, which mandatorily introduced female
quotas in the boards of Italian listed rms in
2012,1might have had on the boards of unlisted
1We discuss the GM law in detail later.
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy
of Management.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs Li-
cense, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-
commercial and no modications or adaptations are made.
1852 Bongiovanni et al.
companies within the banking sector. The law
introduced an exogenous shock in the board com-
position of listed rms but was mute on the obli-
gations on gender parity for unlisted companies.
Yet, the change in social norms on gender equality
introduced by the law could have induced unlisted
rms to adopt more diverse boards under the ef-
fect of normative or mimetic isomorphic pressures
(DiMaggio and Powell, 1983, 1991).
We believe it is important to focus on the bank-
ing sector for ve reasons. First, both at European
level and in Italy, the weight of nancial services
in terms of output reaches around 4% of the gross
value added at constant prices of the total econ-
omy (De Vita and Magliocco, 2018). Second, in-
terest in the banking system is high because of its
special status as a regulated activity (Adams and
Mehran, 2003). Third, due to the explicit or im-
plicit safety nets against banks’ failure and corpo-
rate culture, banks tend to take more risks than
other companies (Mateos de Cabo, Gimeno and
Nieto, 2012; Nguyen, Nguyen and Sila, 2019). As a
result, board failures in nancial rms were found
to be a major cause of the recent nancial crisis
(Kirkpatrick, 2009). It is therefore important to
pay particular attention to banks’ governance in
order to prevent them from taking excessive risks.
Fourth,the banking sector is ordinarily considered
as a labour-intensive industry. Gender diversity is-
sues are therefore particularly relevant within this
industry. Fifth, due to the strong masculine cul-
ture characterizing the banking sector, women are
found to face a double glass ceiling within thatsec-
tor, meaning that even if they make it to middle
management positions, they nd it difcult to fur-
ther advance in their careers (Girardone, Kokas
and Wood, 2021). As a result, women are par-
ticularly under-represented in banks’ boardrooms
(Arnaboldi et al., 2021; Cardillo, Onali and Tor-
luccio, 2020).
Italy represents an interestingcase study to anal-
yse the effects of gender equality policies for the
following two interconnected reasons. First, in the
European context, together with France, Italy is
the country which experienced the largest increase
in female representation in boards as a conse-
quence of the introduction of the female quota
legislation. Specically, the percentage of women
in the boardrooms of Italian listed companies has
increased from 7.4% in 2011 to 33.5% in 2017
(Cerved, 2018). Second, different from France,
Italy was characterized by a particularly low level
of gender equality before the introduction of the
female quotas. In fact, the presence of women on
Italian boards was the second lowest in Europe
in 2010. Thus, Italy represents a perfect natural
experiment to study the effects of gender equal-
ity policies, starting from a context of poor sen-
sitivity to the issue. It is also noteworthy that, to-
gether with banks in other Southern European
countries, Italian banks were strongly affected by
the global nancial crisis coupled with the Euro-
pean sovereign debt crisis. This led to a consolida-
tion of the banking sector, considerably reducing
the number of banks and introducing signicant
uncertainty in the system (Albertazzi, Notarpietro
and Siviero, 2016; Weber, 2017).2
Using a panel of unlisted Italian banks over the
period 2006–2018, we nd that, following the en-
actment of the GM law, both the probability of
having at least one woman on the board and the
proportion of women on the boards have been ris-
ing signicantly. As unlisted banks had no obliga-
tions on gender parity, these horizontal spillovers
can be explained considering that the quota law
may have enhanced attention towardsfemale com-
petence and may have led to an emulation effect in
adopting listed companies’ governance best prac-
tices. More in general, the GM law may have con-
tributed to a change in social norms on gender
equality.
Our paper speaks to the small literature which
focuses on vertical spillovers of board quota laws,
that is, on the effects of the laws on gender diver-
sity below board levelwithin quota-subjected com-
panies (e.g. Wang and Kelan, 2013 and Bertrand
et al., 2019 for Norway; Bennouri, De Amicis and
Falconieri, 2020 for various European countries;
Maida and Weber, 2022 for Italy). We advance
this literature by investigating possible horizontal
spillovereffects of the GM quota lawon the gender
diversity of the boards of non-listed Italian banks,
which were not required to complywith the quota.
Furthermore, by showing that mimetic and nor-
mative isomorphism can explain why,when choos-
ing the composition of their boards of directors,
Italian unlisted banks mimic listed banks in adopt-
ing more diverse boards,our work presents a novel
application of the theory of organizational iso-
morphism (DiMaggio and Powell, 1983, 1991).
2Appendix A discusses the evolution of the European
sovereign debt crisis and its effects on the Italian bank-
ing sector.
© 2022 The Authors.British Journal of Management published by JohnWiley & Sons Ltd on behalf of British
Academy of Management.
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