Gendered language and board diversity: Evidence from European banks

Abstract

Based on a sample of EU banks covering the period 2007 to 2021, I explore the impact of gendered language on bank board diversity policies. I find that gendered language negatively affects banks' gender diversity practices, especially after the passage of board reforms. Further, I find that rule of law and government efficiency explain the relationship, suggesting that these are useful mechanisms to reduce the negative effect of language gender‐marking orientation on banks' gender diversity practices. However, results do not show a statistically significant effect of board gender diversity on riskiness of banks operating in countries with higher language gender orientation. My study provides a timely contribution to the literature by filling the gap regarding the importance of language gender‐marking orientation in explaining banks' diversity practices and suggesting that regulators and institutions should take stronger actions aimed at reducing such cross‐country heterogeneity. It also provides useful insights for EU regulators following the passage of the mandatory “Women on Boards” Directive in 2022.