Board gender diversity and corporate social irresponsibility in a dominant owner context

The growing prominence of women directors has increased interest in their role in firms' social performance. However, knowledge of what impact female directors might have on corporate social irresponsibility (CSI) remains virtually non-existent. This study aims to fill this gap. Using a sample of 107 Spanish listed non-financial companies from the OSIRIS database (Bureau Van Dijk) for the period 2014-2022, together with alternative regression methods to account for endogeneity (2SLS, propensity scoring matching and generalised method of moments), our results show an inverted U-shaped relationship between female directors and CSI. This supports arguments that dominant owners might appoint a small number of female directors symbolically to create a 'halo effect' or to enhance their public image and thus reinforce their entrenchment and divert attention away from CSI episodes. However, the appointment of a critical mass of female directors does evidence dominant owner commitment to move away from irresponsible corporate practices, since the presence of a larger number of female directors encourages the firm's ethical behaviour and increases the costs of penalising CSI episodes in the face of the firm's hypocritical behaviour. This study contributes to the emerging literature on CSI by complementing the knowledge gained from studies on ethical behaviour in a concentrated ownership setting. However, the study is not without limitations, especially in terms of the difficulty of measuring CSI episodes since, despite the work of the media, some socially irresponsible practices may remain hidden.