Gender Diversity Disclosure Regulation

Münsteraner schriften zur internationalen unternehmensrechnung

Herausgegeben von Peter Kajüter

Band 24

Preface

In recent years, growing societal and political concern about the underrepresentation of women in corporate leadership has prompted regulators to promote gender diversity across different corporate hierarchy levels. However, regulators face the challenge of designing effective regulations without unduly interfering with companies’ decision-making freedom in personnel matters. One novel approach, gender diversity disclosure regulation (GDDR), aims to increase transparency and foster public pressure, encouraging companies to appoint more women to management positions. While GDDR has already been implemented by regulators, empirical research on this regulatory approach remains scarce.

In this study, Lennart Prinz investigates the disclosure practice and development in corporate gender diversity, determinants of GDDR efficacy, and potentially unintended consequences on the financial reporting quality of companies. The empirical analysis is based on a sample of 214 German companies that are affected by GDDR between 2015 and 2021.

The first sub-study shows that the disclosure practices vary across the regulated companies. Surprisingly, a considerable share of the analyzed reports do not or not fully comply with the disclosure requirements. However, the results reveal a steady increase in gender diversity on corporate boards. Nevertheless, the increase in gender diversity varies across different company sizes, legal form or listing status. Therefore, Lennart Prinz deals with the determinants of GDDR efficacy. The results of multivariate panel regression models indicate that public pressure, listing status, companies’ gender diversity reporting practice before the implementation of the GDDR and hierarchy-specific determinants are associated with GDDR efficacy. Moreover, the third sub-study investigates the potentially unintended consequences of GDDR. Lennart Prinz shows that companies which considerably increase gender diversity on the supervisory board in response to high public pressure during the sample period exhibit weaker financial reporting quality. Thus, the results indicate that increased gender diversity in the context of GDDR may be accompanied by consequences beyond the intention of regulators.

The empirical study of Lennart Prinz provides remarkable insights into the regulatory efficacy of GDDR and contributes to literature on targeted transparency regulations. The results shed light on the diversity in the disclosure practice, the determinants of GDDR efficacy and indicate that changes in board compositions may entail unintended consequences. The findings of this study are useful for regulators, users and preparers of gender diversity reports, auditors, and enforcement institutions.

Against the backdrop of increased political and public awareness on corporate gender diversity and the valuable contribution of the findings, I wish that Lennart Prinz’s work receives the attention by academia and practice it deserves.

Münster, 31.05.2025

Prof. Dr. Peter Kajüter

Contents overview

1. List of figures

2. List of tables

3. List of abbreviations

4. List of symbols

5. 1 Introduction

   1. 1.1 Motivation and research questions

   2. 1.2 Scientific positioning

   3. 1.3 Study outline

6. 2 Conceptual foundation

   1. 2.1 Types of gender diversity regulations

   2. 2.2 Regulatory environment in Germany

   3. 2.3 Summary

7. 3 State of research

   1. 3.1 Descriptive research on GDDR

   2. 3.2 Research on gender diversity regulation

   3. 3.3 Research on board gender diversity and financial reporting quality

   4. 3.4 Summary and research gap

8. 4 Theory and hypotheses development

   1. 4.1 Theoretical foundation

   2. 4.2 Hypotheses development

9. 5 Gender diversity and disclosure practice under GDDR

   1. 5.1 Research design

   2. 5.2 Results

   3. 5.3 Discussion

10. 6 Determinants of GDDR efficacy

    1. 6.1 Research design

    2. 6.2 Results

    3. 6.3 Discussion

11. 7 GDDR and financial reporting quality

    1. 7.1 Research design

    2. 7.2 Results

    3. 7.3 Discussion

12. 8 Conclusions

    1. 8.1 Main results

    2. 8.2 Implications and contributions

    3. 8.3 Limitations and outlook

13. Appendix

14. List of cited annual reports

15. List of cited laws, regulations, and standards

16. Bibliography

Contents

1. List of figures

2. List of tables

3. List of abbreviations

4. List of symbols

5. 1 Introduction

   1. 1.1 Motivation and research questions

   2. 1.2 Scientific positioning

   3. 1.3 Study outline

6. 2 Conceptual foundation

   1. 2.1 Types of gender diversity regulations

      1. 2.1.1 Regulatory landscape

      2. 2.1.2 Targeted transparency regulations

   2. 2.2 Regulatory environment in Germany

      1. 2.2.1 Corporate governance system

      2. 2.2.2 German Corporate Governance Code

      3. 2.2.3 FüPoG I

         1. 2.2.3.1 Legislative process

         2. 2.2.3.2 Mandatory gender quota

         3. 2.2.3.3 GDDR

         4. 2.2.3.4 Publication requirements

      4. 2.2.4 FüPoG II

      5. 2.2.5 Supranational gender diversity regulations

   3. 2.3 Summary

7. 3 State of research

   1. 3.1 Descriptive research on GDDR

   2. 3.2 Research on gender diversity regulation

      1. 3.2.1 Qualitative research

      2. 3.2.2 Quantitative research

   3. 3.3 Research on board gender diversity and financial reporting quality

      1. 3.3.1 Female board members in non-regulated contexts

      2. 3.3.2 Female board members in the context of gender diversity regulations

   4. 3.4 Summary and research gap

8. 4 Theory and hypotheses development

   1. 4.1 Theoretical foundation

      1. 4.1.1 Principal-agent theory

      2. 4.1.2 System-oriented theories

         1. 4.1.2.1 Legitimacy theory

         2. 4.1.2.2 Stakeholder theory

         3. 4.1.2.3 Institutional theory

         4. 4.1.2.4 Resource dependence theory

         5. 4.1.2.5 Summary

   2. 4.2 Hypotheses development

      1. 4.2.1 GDDR and the development of corporate gender diversity

      2. 4.2.2 Determinants of GDDR efficacy

      3. 4.2.3 Consequences of GDDR on financial reporting quality

9. 5 Gender diversity and disclosure practice under GDDR

   1. 5.1 Research design

      1. 5.1.1 Content analysis fundamentals

      2. 5.1.2 Sample selection process

      3. 5.1.3 Sample description

   2. 5.2 Results

      1. 5.2.1 Compliance with disclosure requirements

      2. 5.2.2 Disclosure practices

      3. 5.2.3 Development of the proportion of women in management positions

         1. 5.2.3.1 Supervisory board

         2. 5.2.3.2 Executive board

         3. 5.2.3.3 Management levels

      4. 5.2.4 Development of self-set targets for women in management positions

         1. 5.2.4.1 Supervisory board

         2. 5.2.4.2 Executive board

         3. 5.2.4.3 Management levels

            1. 5.2.4.3.1 First management level below the executive board

            2. 5.2.4.3.2 Second management level below the executive board

   3. 5.3 Discussion

      1. 5.3.1 GDDR and corporate gender diversity

      2. 5.3.2 Disclosure practice

10. 6 Determinants of GDDR efficacy

    1. 6.1 Research design

       1. 6.1.1 Multivariate panel regression model

       2. 6.1.2 Variables

       3. 6.1.3 Sample adjustments

    2. 6.2 Results

       1. 6.2.1 Supervisory board

          1. 6.2.1.1 Descriptive statistics

          2. 6.2.1.2 Correlation analysis

          3. 6.2.1.3 Multivariate analyses

          4. 6.2.1.4 Robustness tests and sensitivity analyses

          5. 6.2.1.5 Critical evaluation of the results

       2. 6.2.2 Executive board

          1. 6.2.2.1 Descriptive statistics

          2. 6.2.2.2 Correlation analysis

          3. 6.2.2.3 Multivariate analyses

          4. 6.2.2.4 Robustness tests and sensitivity analyses

          5. 6.2.2.5 Critical evaluation of the results

    3. 6.3 Discussion

11. 7 GDDR and financial reporting quality

    1. 7.1 Research design

       1. 7.1.1 Identification strategies

       2. 7.1.2 Variables

       3. 7.1.3 Sample adjustments

    2. 7.2 Results

       1. 7.2.1 Descriptive statistics

       2. 7.2.2 Correlation analysis

       3. 7.2.3 Multivariate analyses

       4. 7.2.4 Sensitivity analyses and robustness tests

    3. 7.3 Discussion

12. 8 Conclusions

    1. 8.1 Main results

    2. 8.2 Implications and contributions

    3. 8.3 Limitations and outlook

13. Appendix

14. List of cited annual reports

15. List of cited laws, regulations, and standards

16. Bibliography

List of figures

1. Figure 1-1: Research fields of the study

2. Figure 1-2: Study outline

3. Figure 2-1: Regulatory approaches to influence corporate behavior

4. Figure 2-2: Targeted transparency action cycle

5. Figure 2-3: GDDR causal chain

6. Figure 2-4: Comparison between one-tier and two-tier corporate governance systems

7. Figure 2-5: Companies subject to FüPoG I

8. Figure 2-6: Decision tree on the scope of GDDR and mandatory gender quota under FüPoG I

9. Figure 2-7: Overview of regulatory requirements by FüPoG I and FüPoG II

10. Figure 3-1: Identification of the research gap

11. Figure 4-1: Twofold principal-agent relationship in two-tier corporate governance systems

12. Figure 4-2: Overview of system-oriented theories