Discussion and Conclusions
Low female board membership is a high-profile issue of interest for various interest groups, policy-makers, fund managers, and the popular press.25 Based on the studies that link political conservatism and sexism, we predict that female board membership and financial performance differ between red and blue states, and across regions where residents have a more stereotypical notion of women’s role in the workplace. We find that both financial performance and female board representation are lower for firms headquartered in red states when compared to those in blue states, and find similar results for firms located in regions where residents hold more gender-stereotypical views. Most individuals will agree that inequality still exists in the U.S. and around the world. The GSS survey confirms that stereotypical social attitudes toward gender and race equality do exist at the present time. For example, the 2016 GSS Attitudes_Gender survey finds that 31.0% of adults in the U.S. believe that it is better for men to work and women to tend the home, although the 2016 percentage declined from the 1996 level of 37.9%. The same survey also finds that 8.5% of adults believe that African-Americans have inborn learnings disabilities (Attitudes_Race). One of the useful findings in this study is that prejudice is costly for a firm. In particular, we find that the firm value for red-state companies is lower by 17.4% of assets when compared to blue-state companies, and similarly in regions where residents hold more biased social attitudes toward gender or race equality. Thus, discriminatory practices, regardless of being gender- or race-related, are costly for the firm and translate into a lower firm value and operating performance.
