From Boardroom to Courtroom: Gender Diversity and Legal Strategies

Abstract

We examine how female board representation shapes firms’ litigation strategies as defendants. We do so by exploiting the SEC’s 2010 Proxy Disclosure Enhancements Rule, which induced uneven post-reform increases in board gender diversity depending on firms’ pre-reform composition. Using this quasi-experimental variation, we find that greater female representation is associated with a higher likelihood that disputes conclude before any court filing, while conditional on reaching court, subsequent trial and post-trial outcomes are largely unchanged. The pre-court effect reflects more discriminating case selection: gender-diverse boards are more likely to discontinue weaker matters and to proceed with stronger ones, raising success rates among continuing cases. To capture case quality, we estimate a Lasso-logit model predicting defendants’ winning probabilities from observable case characteristics, allowing us to distinguish selective screening from indiscriminate risk avoidance. We present a theoretical model of endogenous information acquisition that links these empirical patterns to greater information precision and a higher litigation threshold, shifting borderline disputes toward settlement and increasing early resolution without altering outcomes once litigation proceeds.