Female Board Representation and Firm Efficiency:Investigating via Human Capital Development Policies

Abstract

In this study, we focus on how female board representation impacts firm efficiency through the enactment of human capital development policies. Drawing upon upper echelons theory and the literatures on glass ceiling, human capital, and training and development, we argue that increasing female board representation will lead firms to improve human capital development policies, though this positive relationship will ultimately diminish as boards accrue greater levels of gender diversity. We further predict that these policies will translate into greater firm efficiency as well as mediate the relationship between female board representation and firm efficiency. Using a sample of S&P 1500 firms from 2007 to 2017, we find support for our hypotheses. Our findings provide evidence that female board representation alone may not translate into improved firm efficiency; rather, the unique perspective of female directors lead them to put in place human capital development policies that are beneficial for improved firm efficiency.