Gender Diversity in the Boardroom (original) (raw)
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Gender Diversity in the Boardroom1
2007
Although some argue that tokenism drives the selection of female directors, we show that they have a significant impact on board effectiveness. Amongst others, we find in a large panel of data on publicly-traded firms from 1996-2003 that (1) the likelihood a female director is named in a proxy as having attendance problems is 0.29 lower than for a male director, (2) male directors have fewer attendance problems the greater the fraction of female directors on the board, and (3) firms with more diverse boards provide their directors with more pay-performance incentives. We instrument for gender diversity using the fraction of male directors connected to female directors through other board seats. In IV regressions, we find that the average effect of gender diversity on Tobin's Q and ROA is negative. However, this negative effect is driven by companies with good corporate governance.
Gender diversity in the boardroom and firm financial performance
Journal of business ethics, 2008
The monitoring role performed by the board of directors is an important corporate governance control mechanism, especially in countries where external mechanisms are less well developed. The gender composition of the board can affect the quality of this monitoring role and thus the financial performance of the firm. This is part of the ''business case'' for female participation on boards, though arguments may also be framed in terms of ethical considerations. While the issue of board gender diversity has attracted growing research interest in recent years, most empirical results are based on U.S. data. This article adds to a growing number of non-U.S. studies by investigating the link between the gender diversity of the board and firm financial performance in Spain, a country which historically has had minimal female participation in the workforce, but which has now introduced legislation to improve equality of opportunities. We investigate the topic using panel data analysis and find that gender diversity -as measured by the percentage of women on the board and by the Blau and Shannon indices -has a positive effect on firm value and that the opposite causal relationship is not significant. Our study suggests that investors in Spain do not penalise firms which increase their female board membership and that greater gender diversity may generate economic gains.
Women in the boardroom and their impact on governance and performance
We show that female directors have a significant impact on board inputs and firm outcomes. In a sample of US firms, we find that female directors have better attendance records than male directors, male directors have fewer attendance problems the more gender-diverse the board is, and women are more likely to join monitoring committees. These results suggest that gender-diverse boards allocate more effort to monitoring. Accordingly, we find that chief executive officer turnover is more sensitive to stock performance and directors receive more equity-based compensation in firms with more gender-diverse boards. However, the average effect of gender diversity on firm performance is negative. This negative effect is driven by companies with fewer takeover defenses. Our results suggest that mandating gender quotas for directors can reduce firm value for well-governed firms.
The impact of the gender composition of company boards on firm performance
International Journal of Productivity and Performance Management, 2021
PurposeThe authors estimate the effect of the gender composition of company boards on firm performance by exploiting variation in the percentage of women after the implementation of a 2011 Belgian policy reform, which introduced a gender quota for listed companies.Design/methodology/approachThe authors analyze the evolution of firm performance between companies that were subjected to the quota law and compare it with the performance of similar firms that were not subjected to the law. This difference-in-difference (DiD) approach allows the authors to avoid the potential bias resulting from unobserved firm characteristics.FindingsThe authors find that the quota policy resulted in the replacement of about one male director by a female one in the average firm between 2010 and 2017. However, this increase in diversity appears to have negatively affected some firm performance indicators. The authors find statistically significant negative effects for 10 out of the 23 financial indicators...
Journal of Management & Governance, 2015
This study empirically analyzes whether gender diversity enhances boards of directors' independence and efficiency. Using data from 3,876 public firms in 47 countries and controlling for a wide set of corporate governance mechanisms, we find that firms with more female directors have higher firm performance by market (Tobin's Q) and accounting (return on assets) measures. The results also suggest that external independent directors do not contribute to firm performance unless the board is gender diversified. These results hold with respect to different estimation models and robustness tests. Overall, our findings provide evidence that the female directors enhance boards of directors' effectiveness. Finally, we find that firms that are concerned with board independence, and that firms in more complex environments are more likely to have gender-balanced boards.
Additions to corporate boards: the effect of gender
Journal of Corporate Finance, 2005
During the decade of the 1990s the number of women serving on corporate boards increased substantially. Over this decade, we show that the likelihood of a firm adding a woman to its board in a given year is negatively affected by the number of woman already on the board. The probability of adding a woman is materially increased when a female director departs the board. Adding a director, therefore, is clearly not gender neutral. Although we find that women tend to serve on better performing firms, we also document insignificant abnormal returns on the announcement of a woman added to the board. Rather than the demand for women directors being performance based, our results suggest corporations responding to either internal or external calls for diversity.
Board Gender Diversity and Internal Control Weaknesses
Advances in Accounting, 2016
We investigate the role of gender diversity on corporate boards in mitigating internal control weaknesses (ICWs). We predict and find that firms with greater female board representation are less likely to have ICWs. The results are not driven by females sitting on the audit committee. Instead, it appears that females on corporate boards reduce ICWs, regardless of whether they sit on the audit committee or not. Our results are inconsistent with the critical mass theory, showing that even one female board member could reduce the likelihood of ICWs. Taken together, the evidence is consistent with female board members' typical characteristic tendency shown in prior literature (e.g., being more likely to discuss difficult issues, more fiscally conservative, better monitors, and less tolerant of opportunistic behaviors). Our results have implications for board member selection from a policy perspective as well as board member monitoring from an investor and regulator perspective.
This paper aims to critically review the existing literature on the relationship between the Corporate Governance aspect of board gender diversity, and its influence on corporate performance. This review specifically evaluates theoretical and empirical literature related to board gender diversity and corporate performance with an aim of establishing areas of gaps for further research. In particular the paper identifies some of the important theoretical, operational, measurement, contextual and methodological drawbacks in previous researches and literature that restrict generalization of results to particular contexts, sectors and larger populations. Additionally, several research avenues are proposed for in-depth understanding of the relationship between board gender diversity and corporate performance. Finally, the implication of the study on policy, theory and practice are discussed. Corporate Governance and Board Gender Diversity The concept of corporate governance has continued to elicit lots of scholarly debate owing to multi-dimensionality and multidisciplinary definitions .Among economists and legal scholars, corporate governance is defined as defense of shareholders' interests (Tirole, 2001) Alternately, Shleifer & Vishny, (1997) defined corporate governance as the process though which suppliers of finance to corporations gain assurance of return on their investment. Hill & Jones (2001) assert that corporate governance from a managerial perspective refers to the controls used to ensure that managers' actions are consistent with the interest of key constituent shareholders. From these definitions, corporate governance generally depicts the process which determines the purpose of the organization (whom exists to serve) and how
Women on Board: Does boardroom gender diversity really affect firm risk
We investigate the gender diversity-risk relationship from the perspective of equity holders. A naïve analysis shows a negative relationship between boardroom gender diversity and equity risk across firms. This cross-sectional relationship applies to both systematic and idiosyncratic risks. However, when we employ more sophisticated identification strategies to investigate the variation within the firm (using Two-Stage Least Squares with Fixed Effects and Dynamic Panel GMM) or the impact of female director appointments on risk measures (using Difference-inDifference Matching Estimator) the negative relationship disappears. Although we find that the director appointment process is not gender neutral, this process cannot be explained by the firm's risk. Our results lead to the conclusion that the negative relationship between gender diversity and equity risk is driven by between-firm heterogeneous factors that influence both boardroom female representation and the firm's risk measures. 2
Gender Diversity of Boards, Board Composition and Firm Performance
The broad objective of this research was to determine whether gender diversity of boards and board composition, affects performance. Secondary data was collected for a ten-year period from 2006 to 2015 from 98 sampled financial institutions. Multiple regression analysis and generalized estimating equations were used in analysis of the collected data. Parametric and non-parametric methodologies were used. The study was anchored on the agency theory, stakeholder theory, the human capital theory and resource dependence theory. The results show that, gender diversity of boards and board composition had no independent significant influence on performance of financial institutions. Through the study formulation of managerial policy and practice that promote better governance practices and appropriate firm characteristics that improve performance of financial institutions will be enhanced.