Role of Old Boys' Networks and Regulatory Approaches in Selection Processes for Female Directors

This study examines the influence of directors' and CEOs' networks in the appointment of female directors. Building on social identity theory and social network theory, we argue that since men and women are members of different networks, recruitment practices based on networks prevent women from accessing board positions. We also examine the role of board gender diversity regulation on the influence of networks, hypothesizing that such regulations help in deinstitutionalizing `old boys' networks', based on institutional theory. Using a sample of 32,819 new board appointments in the largest listed firms of 17 European countries, the USA and Canada, we determine whether new directors are directly linked through employment, board, charities or club memberships, to the incumbent directors or the CEO. We find that the probability that the new director appointed is a woman decreases by approximately 28% when the new director is associated with one of the incumbent directors. We also find that gender diversity regulation reduces the influence of networks in the appointment of female directors. Our results provide archival evidence that board networks hinder the recruitment of female directors and that gender diversity hard and soft laws deinstitutionalize old boys' networks.