Beyond Critical Mass: Nonlinear Effects of Female Directors on Carbon Emissions Disclosure in Emerging Markets

This study investigates whether female representation on corporate boards and carbon emissions disclosure (CED) are interrelated in an emerging market. Using critical mass theory (CMT), which posits that female directors can surely impact the decisions of boards once they reach critical mass, we examine whether the presence of three women on the board or approximately 30% board membership is necessary in Indonesia. This context is important since (i) boards are still a long way from representing the demographics of Indonesians due to low female representation on boards; (ii) in many cases board sizes are too small for meaningful communication between two directors; and (iii) regulations surrounding environmental disclosure barely exist relative to more developed markets. Based on panel data from Indonesian manufacturing firms, the study demonstrates that the effect of board gender diversity on CED is nonlinear and contextually dependent. The results demonstrate that the core idea of CMT is not fully supported in this setting. The presence of even a single female director is linked to higher levels of carbon emissions disclosure, signaling that female directors likely play a substantive role and serve more than just symbolic purposes. That said, improvements associated with having women on the board do not increase progressively with more females taking a seat around the table. However, the positive effect is diminished and becomes statistically insignificant at higher levels of female representation. The results also imply that firms whose board of directors contain moderate levels of gender diversity (with 20–40% women on the board) engage in Type I CED to the highest extent. However, boards nearing a gender balance do not seem to garner any further benefits from disclosure.