The Importance of Codetermination for Gender Diversity in the Boardroom

ABSTRACT This study examines the interplay of codetermination law and board gender quotas using novel board‐director panel data for Norway. We present descriptive evidence suggesting that boards with employee representatives on boards of directors were more gender diverse before the gender quota. Difference‐in‐differences estimation results reveal that the differential effect of employee representation on gender diversity is negative after implementing the quota. Boards with employee representatives have recruited fewer women during the phase‐in period, and the flexible quota tended to be ineffective. We interpret the effect through employee representation as a potential mediating factor of board gender quotas on gender diversity.