Dangerous products recalled faster when women are on the board

Compared to firms with all-male boards, those that have added women as directors:

• Announce high severity recalls 28 days sooner. This is a 35% reduction in the time between when the firm was first made aware of the defect and when the firm decided to recall the defective product. To be clear, these are recalls of products with the most serious, life-threatening defects. 

• Show a 120% increase in low severity recalls, which concern product defects such as packaging or labeling issues that firms could more easily hide from regulators. This represents, on average, an increase from 10 to 22 low severity recalls.

Central to this link between board composition and product recalls is the notion that boards are established specifically to oversee and set the tone for how managers make critical firm decisions. We reasoned that boards with more women might set a tone for stricter abidance by FDA rules, have higher aversion to risk when it comes to possible product harm, and be more responsive to a diverse set of stakeholders, including at-risk customers.

The experience of more likely exposure to adverse effects from product recalls may also make this issue more salient in the minds of women board members. After all, medical products and innovations often have more negative side-effects for women, most likely because male scientists are less likely to incorporate gender and sex analyses in their research. Most recently with COVID-19 vaccines, women have reported more side-effects than men.

The difference in product recall decisions between firms with and without women directors is striking. One could call it a matter of life and death.

Compared to firms with all-male boards, those that that have women directors announce high severity recalls 28-days faster or a 35% reduction in recall timing, which for these types of recalls, is truly a matter of life or death. Furthermore, we found that when a board has just one woman director seriously defective products are not recalled more quickly. It’s only when there are at least two women directors on the board that the timeliness of severe product recalls increases; when there are three women directors, the recall decision moves along even faster.

Recall decisions are risky for firms. While consumers have the most to gain by defective products being recalled faster, companies have the most to lose, because these recalls expose them to public, regulatory and stock market penalties. Such high-risk decisions that put customer safety ahead of the bottom line apparently happen more quickly when a larger number of women directors sit on a firm’s board.

In contrast to high severity recalls which are difficult to hide from the public in the long run, low severity recalls can be hidden from regulators. Yet, even for these types of recalls, which are of low severity and for which executives have much higher discretion, boards with women directors announce 120% more recalls, in comparison to a board that has no women directors. That is equivalent to 12 additional recalls per firm. In this case, the addition of just one female director causes a change in how these decisions are made, and the number of recalls of this type announced continue to increase as firms add each additional woman director.

Our study shows that there is a difference in very real and important consumer safety outcomes between firms who have added women to their boards and those who have not.