From boardroom to executive suite: exploring the trickle-down effect of gender diversity in an emerging economy

Purpose: This paper investigates whether women’s representation on corporate boards influences women’s presence in senior management in an emerging economy. 

Design/methodology/approach: This study utilizes a sample of publicly traded firms from 2018 to 2022. We employ the ordinary least squares and logistic regression models to test the hypotheses and apply the instrumental variable approach and propensity score matching to mitigate potential endogeneity concerns. 

Findings: Our empirical results show that board gender diversity (BGD) is positively associated with both a higher probability of women’s inclusion and greater representation of women in the top management team (TMT) consistent with the trickle-down perspective. Our further investigation shows that the higher probability and proportion of women’s presence is statistically significant and stronger when three or more women participate in boardrooms, indicating the critical mass effect of women directors. The findings remain robust to endogeneity concerns, as tested using the instrumental variable approach and propensity score matching, and alternative measures of BGD and women’s presence in TMT. 

Practical implications: The findings offer insight into the benefits of BGD from the perspectives of developing countries. Policymakers and regulators may consider the findings, while formulating new regulations or recommendations to promote gender equity. 

Originality/value: This paper provides novel evidence of the influence of BGD on women’s representation in top management from the emerging economy perspective. It further adds to the literature showcasing that the impact varies with the level of board diversity, indicating the critical mass effect.