Breaking down barriers to innovation: The real effects of gender diversity following the relaxation of one-child policy in China

Abstract

This study explores the relationship between gender diversity on corporate boards and corporate innovation. Using China's relaxation of one-child policy, which significantly reduced the proportion of female employees, we provide evidence that board gender diversity positively affects corporate innovation. Three plausible underlying mechanisms are reduced executive turnover–performance sensitivity, increased numbers of executives with an R&D background, and promotion of an innovative corporate culture. Our main findings are more pronounced for state-owned firms, firms in innovation-intensive industries, and firms in capital-intensive industries than for their respective counterparts.