Regulatory mandates by various governments on women representation in company boards play an important role in fulfilling the sustainable development goal 5 (SDG-5 on gender equality) adopted by the members of United Nations. In this paper, we explore the heterogeneity in firm responses to such a regulatory mandate introduced by the Indian government in 2014. We propose that, driven by the need to build legitimacy among internal and external stakeholders, family firms are more likely to comply with the mandate, when compared to non-family firms. However, family firms are also driven by considerations to leverage women family members and minimize board independence and hence are likely to appoint a woman executive director rather than an independent director. Within a sample of family firms, this pattern of behaviour is more likely among standalone firms when compared to firms belonging to family-owned business groups. We find supportive evidence in a comprehensive panel data sample of 1507 publicly listed Indian firms over a five-year period (2013 to 2017), consisting of pre- and post-regulation years.
Keywords: Women Directors, Regulatory Mandates, Sustainable Development Goals, Natural Experiment, Family Business, Business Groups