Female Board Leadership, Firm Performance, and Corporate Governance: Evidence from China

Abstract

Using a large sample of Chinese firms, we examine the differences in firm performance and board functioning between firms with female chairs and those with male chairs. After controlling for the presence of female CEOs and the proportion of non-chair female directors on the board, we find that chairwoman firms perform better than chairman firms. Boards led by chairwomen also play not only a more effective supervisory role (as evidenced by a lower likelihood of committing accounting fraud and higher forced CEO turnover- and pay-performance sensitivity) but also a more active managerial role (as evidenced by more value-enhancing risky investment, more innovation activities, and more effective responses to industry-wide shocks). Moreover, the presence of female chairs is associated with better attendance behavior among independent directors. These results, which are robust to controlling for self-selection biases and board gender diversity, suggest that in board decision making, chairwomen play a more effective leadership role than chairmen.