This study examines the moderating role of ultimate owners in the relationship between female directors and employment stability, and tests whether this moderation can be achieved through a mediation process whereby female directors reduce top managers’ incentive compensation to enhance employment stability. We analyze longitudinal data of Taiwanese firms from 2005 to 2019 in a multilevel mediated-moderation model. Our results indicate that while female directors have a positive impact on employment stability, this effect is attenuated by ultimate owners’ private benefit-seeking control. We also find that this moderating effect can be realized by moderating the mediation process between female directors and employment stability. In addition, we explore the differences between family and non-family firms and consider the issue of critical mass. Overall, our study suggests that the value of a gender-diverse board for employment stability depends on appropriate governance structures.
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