Do shareholders drive changes in board composition? Bords' gender ratios in restructuring firms

We examine when shareholders may exploit firm restructuring as a turnaround opportunity to change board composition, and specifically female representation. We hypothesize that when shareholders have the power to and interest in designing their preferred governance structure, the resulting board may exhibit lower proportions of female directors. Data from all the restructuring activities undertaken in the US between 1999 and 2015, matched with board composition information, show a negative effect of shareholders’ amount of ownership on a restructuring firm’s board proportion of women. Additionally, firm performance moderates this relationship, such that the negative impact on boards’ gender composition is lower for high-performing firms than lowperforming ones. These results support empirically the agency theory notion that in strategic restructuring investors fulfill an important external governance function.