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Accelerating time
Journal of General Management  (IF),  Pub Date : 2018-03-26, DOI: 10.1177/0306307017752407
Patrick Joseph McHugh, Elise Perrault

Using a legitimacy lens, we theorize that changes in the firm’s board of directors parallel the evolving stakeholder audience that accords legitimacy to the firm—a key resource to the firm’s survival. Powerful new stakeholders post- initial public offering (IPO) such as the listing exchange and the securities regulators are anticipated to impact board gender diversity through their regulatory pressure, while pre-IPO investors such as venture capitalists are reducing their equity positions and thus providing opportunities for director turnover. At the same time, the firm is increasing in size and visibility, building additional sociocultural legitimacy pressures for increased gender diversity. While prior research centers on the effect of different types and intensity of legitimacy pressures on board characteristics, we explore how changes in the question of firms’ legitimacy “to whom” affects board composition, that is, we examine the comparative effect of regulation and society on board composition. We test our hypotheses by analyzing panel data for all North American technology firms doing IPOs on the NASDAQ exchange during a 12-year time frame between 1997 and 2011. Our analysis shows that regulation, although not explicitly directive, can play a key role in accelerating board gender diversity. Implications for future research on corporate governance and managerial and policy takeaways complete this article.