Women on board, quota and board tasks: The sanctions matter

In the last years most EU countries have enacted quota to increase the number of women on corporate boards. Specifically, we focus on two countries: Italy and Spain. Both of them have introduced quota but the sanctions related to the non-compliance of the regulation is different. We study the effect of female directors on corporate board tasks. We investigate the effect of women on boards on the following board tasks: (1) firm monitoring; (2) firm strategy; and (3) advising. Specifically, our research demonstrates that the critical mass of female directors, mandated by the law, matters for the firm monitoring task both in Italy and Spain. However in Spain, where the sanctions of not compliance of the law are less severe than in Italy, the impact of the percentage of women on boards on the monitoring task is positive and statistically significant only when women equaled or higher than 40%. Regarding the advising task our results document that in Italy, having at least 20% of women on corporate boards increases board involvement in strategy. Whereas in Spain there is a positive relationship between critical mass of women and the extent to which board engages in strategy involvement activities only when women reach 33% of the board.