previously CESifo working paper, winner of the 50th EFA best doctoral tutorial award

This paper investigates whether and how company boards affect firm performance. It sheds light on decisions taken by these types of high-level managers and the importance of member variety in the board profit function. I study a regulation in France that exogenously changed boards by mandating a minimum representation of each gender for firms above a certain size threshold. I show that the gender quota constrains firms to diversify boards across a variety of individual traits such as age and nationality. New boards increase various measures of profitability by around 7%. A decomposition of all margins of adjustments indicates that the rise in profits occurs mainly through cuts in variable labor costs. Results suggest that new boards use temporary high-skilled workers to enter new markets and increase firm revenue. I identify a non-linear mapping from member characteristics to firm outcomes. I relate profits to changes in board members to infer switchers' ability and separately quantify the relevance of member variety. I find that ability explains around 35% of the profit variance but that observable traits matter at the margin. I tie back the substantial gains from the regulation to the diversification of individual traits which are complementary inputs in boards.

Conferences/workshops: EARIE, RES, Brucchi Lucchino, AFSE, IZA women in leadership workshop, LIEPP, CESIFO, RIEF, SOLE, EEA, EFA, EALE, CEPR-IO, Economics of firms and labor workshop (LMU)

Invited seminars: Federal reserve board Atlanta, Ludwig Maximilans Universitat (organizations research group), Erasmus School of Economics (finance group & applied economics group), Harvard Business School (strategy unit), EBRD, European Commission (DG ECFIN)