Research Note Women in Upper Echelons of Management, Tenure and Legal Risk Shuji Bao, Stav Fainshmidt, Anil Nair and Veselina Vracheva Department of Business Administration, Constant Hall 2030, College of Business and Public Administration, Old Dominion University, Norfolk, VA 23529, USA Corresponding author email: anair@odu.edu Integrating risk, gender diversity and upper echelons literatures, we examine whether the presence of women in upper management (top management team (TMT) and board of directors (BOD)) and the tenure of TMTs and BODs are associated with the risk of lawsuits. An analysis of data from firms in the US retail industry shows that the presence of women in TMTs and BODs and the tenure of TMTs and BODs are negatively associated with legal risk, but longer tenured BODs with more women had a positive impact on lawsuits. Implications and suggestions for future research are offered. Introduction We investigate whether the presence of women in a firm’s top management team (TMT) and board of directors (BOD), and the tenure of members in these two groups, impact the firm’s legal risk exposure. Risk is an important factor that con- fronts managers and firms, and is a vital area of research within management (Bromiley, Miller and Rau, 2001). Knight (1921) conceived risk as a situation where there exists a well-defined prob- ability of potential outcomes. In particular, a firm is exposed to ‘legal risk’ when it is the subject of a claim or proceedings due to some infringement of laws or regulations, or because of some action that gives rise to civil liability (McCormick, 2006). Recent examples of such lawsuits include the gender discrimination lawsuit against Wal-Mart, product safety lawsuits against Toyota (Ramsey, 2010), shareholder lawsuits against Halliburton (Economist, 2011) and environmental pollution lawsuits against British Petroleum (Perez, 2010) and Massey Energy (Maher, 2012). Due to the significant financial consequences and impact they may have on firm reputation, managers are interested in identifying factors that influence such legal risks. 1 While lawsuits against firms are becoming more frequent with ever higher financial and reputa- tional consequences, to our knowledge no study has examined whether the presence of women in TMTs and BODs impacts such legal risks. 2 It is Authors are listed alphabetically. An earlier version of the paper was presented at the Southern Management Asso- ciation annual conference. The paper has benefited from the comments that we received from conference reviewers and participants. We thank Dr David Selover (Depart- ment of Economics) and Dr Ed Markowski (Department of IT and Decision Sciences), both at Old Dominion University, for assistance with data analyses and interpre- tation. We thank our colleagues, especially Dr Lance Frazier, for feedback on earlier versions of the paper. 1 Legal risk is one among many risks that firms face. Increasingly, firms are adopting enterprise-wide systems and processes to identify and manage such risks (Beasley, Branson and Hancock, 2010). Risk management has become so critical that recently Standard and Poor’s has also started rating firms’ enterprise risk management effectiveness. 2 We did a search of the ABI/Inform/EBSCO databases for the following terms in the abstract: ‘top management team’, ‘board of directors’ and ‘upper echelon’ in com- bination with ‘legal risk’, ‘lawsuits’ and ‘litigation’. We found no published studies in academic journals linking the presence of women on TMTs and BODs as well as the tenure of these groups to legal risk as defined in the present study. bs_bs_banner British Journal of Management, Vol. 25, 388–405 (2014) DOI: 10.1111/j.1467-8551.2012.00847.x © 2012 The Author(s) British Journal of Management © 2012 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.