A Snowball Starting in Norway
Edited by Silke Machold, Morten Huse, Katrin Hansen and Marina Brogi
Chapter 21: Legitimacy, inclusion and influence: investigating women directors’ board experiences
From a resource-dependence perspective, a board’s major role is to provide the firm with needed resources, such as advice and counsel to management, reputation and legitimacy, and external ties or social networks (Hillman et al., 2000; Hillman and Dalziel, 2003; Lynall et al., 2003). The opponents to the quota rule in Norway did express concerns regarding a lack of sufficiently competent women to fill 40 percent of the director positions. For instance, business leaders and employer organizations warned that a lack of women with relevant management experience would lead to reduced performance, authority and legitimacy of Norwegian boards, resulting in the reduced competitiveness of Norwegian industry in international markets (Hoel, 2008). Thus, there were strong indications that women were regarded as an out-group in the business elite context (Singh and Vinnicombe, 2004; Tsui et al., 1992) and that the contributions women could make to corporate boards were in question. Studying reactions to the quota rule on the Oslo Stock Exchange, Nygaard (Nygaard, 2011) found that the public limited companies (PLCs) subject to the quota did experience positive and significant cumulative abnormal returns (CAR) on stock subsequent to the introduction of the rule, but only in firms with low information asymmetry. Low information asymmetry was defined as publicly available information sufficient to perform an effective monitoring role for outside directors (Nygaard, 2011, p. 3). As 83 percent of female directorships in PLCs in Norway are outside directors (Staubo, 2010), it appeared that in firms where the newly appointed women had sufficient information to perform effective monitoring, the firms’ value increased.
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