Beyond quotas: how ESG disclosure and critical mass of female directors shape firm value in France

Purpose – We investigate whether environmental, social, and governance (ESG) disclosure and board gender diversity (BGD) affect the firm value for a sample of French non-financial listed firms during the concurrent enactment of French CSR and BGD quota laws. Specifically, we investigate whether ESG disclosure is positively associated with firm value, examine the impact of BGD on firm value, and explore whether reaching a critical mass of female directors (three or more) further enhances firm value. Design/methodology/approach – Drawing upon agency theory, resource dependence theory, and critical mass theory, we develop our study hypotheses. We apply Generalized Method of Moments (GMM) multivariate linear models to 900 observations during the period 2011 to 2019 to reach empirical findings while addressing endogeneity concerns. Findings – Our findings indicate that ESG score positively influences the firm value (Tobin’s Q), whereas BGD has a negative impact. Moreover, BGD positively affects the firm value when the number of women directors reaches a threshold of five, supporting the critical mass theory perspective. Research limitations/implications – Our study focuses solely on France, limiting generalizability due to its unique regulatory environment, yet emphasizing the importance of considering diverse regulatory contexts in future research. Practical implications – The study offers insights for corporate management to address stakeholders’ growing demands to disseminate a greater volume of ESG information, comply with women’s quota systems, and appoint experienced and talented female directors to ensure effective governance, rather than symbolically increase female representation in boardrooms. Social implications – The study informs regulators and policymakers on promoting ESG disclosure practices and establishing guidelines for achieving an optimal number of qualified women directors to maximize governance effectiveness. Originality/value – The study enhances stakeholders' understanding of how ESG disclosure and BGD influence firm market value, with a specific focus on the implications of the Copé-Zimmermann law and French CSR regulations.