Female directors and CEO power

Beyond the recent studies on boardroom gender diversity, this letter investigates the effect of boardroom gender diversity on CEO power. Using the data of all A-share listed companies on the Shanghai and Shenzhen stock exchanges for 2005-2015 we find reliable evidence that gender diversity on the board is positively associated with CEO power. Our results remain consistent after controlling for the endogeneity problem. Our results support the inefficiency hypothesis that suggests that CEOs are more powerful when the board is gender-diverse because female directors face more pressure to go along with management and are weak monitors.