Board gender quotas, female directors and corporate tax aggressiveness: A causal approach

• Published in: International review of financial analysis 2022-01, Vol.79, p.102010, Article 102010
• Main Authors: Garcia-Blandon, Josep, Argilés-Bosch, Josep Maria, Ravenda, Diego, Castillo-Merino, David
• Format: Article
• Language: English
• Subjects: Difference-in-differences; Female directors; Gender quotas; Tax aggressiveness
• ISSN: 1057-5219; 1873-8079
• DOI: 10.1016/j.irfa.2021.102010

As a result of a mandatory board gender quota regulation, the percentage of female directors in Norway increased from around 5% in 2001 to over 40% in 2007, while it remained stable in neighbouring Denmark. Taking advantage of this unique research setting, this study implements a difference-in-differences approach to investigate the effects of the gender composition of the board of directors on corporate tax aggressiveness. Results indicate that the likelihood of corporate tax aggressive strategies increased in Norway after the appointment of many female directors, compared to the situation in Denmark. This finding is robust to a battery of sensitivity analyses and, in particular, to how corporate tax aggressiveness is measured. We interpret this result as caused by the way in which the incorporation of women to the boards was achieved, that is, through a mandatory board gender quota regulation. Possible implications of the findings are discussed. •We take advantage of the Norwegian board gender quota to study the impact of female directors on tax aggressiveness.•Results show that tax aggressive strategies increased in Norway after the appointment of a large number of female directors.•This finding is robust to a battery of checks and, in particular, to how corporate tax aggressiveness is measured.•Results highlight the importance of considering how female directors are appointed.