Cultural tightness measures the extent to which individuals behave according to the broader values shared by other members in society. While cultural tightness has been studied extensively in the context of individuals’ behavior and (cross) country-level outcomes, much less is known about the explanatory power it holds in the setting of organizational structures. Motivated by the ambiguous relationship between cultural tightness and population-level gender equality documented by prior literature, we investigate whether cultural tightness helps explain board gender diversity levels in China. Rooting our hypotheses in institutional theory and the contextual governmental reforms of China, we leverage a large sample of Chinese A-share listed firms and document that firms located in culturally tight provinces have higher levels of board gender diversity. Further analyses reveal that cultural tightness in China partially offsets the impact of more traditional Confucian values, and the relationship becomes more pronounced in settings where firms can realize higher legitimacy gains from adopting women on their boards. Finally, we counter potential critiques of window dressing, by demonstrating that in culturally tighter areas women are more likely to be higher educated, have more experience abroad, hold more board positions, and are less likely to be independent directors.

Recent sociological research suggests that culturally tight environments enforce strong social penalties for mistakes. I find that such culturally tight environments incentivize managers to suppress negative information, increasing stock price crash risk. Opaque financial disclosure is a channel through which cultural tightness affects managerial bad news hoarding. Labor and capital market pressures strengthen the positive effect of cultural tightness on crash risk. The instrumental regressions using labor-intensive agriculture and ethnic homogeneity as instruments confirm a positive tightness-crash relationship. Finally, changes in environments because of headquarters relocations affect managerial tendencies to withhold bad news, resulting in changes in crash risk levels.