Corporate Governance and Gender Diversity : Endogenous Preferences and Fiscal Policy Design

Gender diversity in corporate governance has become an increasingly important focus of academic and policy interest. While significant strides have been made in the representation of women across various managerial roles, the corporate boardroom remains a domain where gender disparities continue to persist. This dissertation explores whether male board directors’ family dynamics -- particularly having daughters -- affect their professional decision-making processes, specifically in the appointment of female executives. Central to this inquiry, and examined empirically, is the question of whether such behavioral patterns are consistent with the rational assumptions of complete and transitive preferences that underpin classical economic theory and decision-making models. The thesis spans four papers: the first two explore "the daughter effect" within the context of Swedish corporate governance, while the third examines these empirical findings from a theoretical perspective, drawing on both traditional economic and neuroeconomic frameworks. In the fourth paper, I propose a tax-deductible policy incentive designed to encourage firms to increase and invest in female participation in top management. Drawing on principles of optimal taxation theory, I introduce the Gender Equality Reserve (GER), a fiscal incentive allowing firms to deduct pre-tax investments in gender-focused organizational capital. A stylized neoclassical model illustrates how informational frictions and externalities lead to suboptimal levels of inclusive governance. By lowering the effective cost of such investments, the GER partially internalizes their social benefits and incentivizes firm behavior to move toward the socially optimal level of gender diversity in leadership structures, all while preserving firms' organizational autonomy and decision-making independence.