Firm performance and boardroom gender diversity: A quantile regression approach

Abstract

We investigate the relation between firm performance and boardroom gender diversity using quantile regression methods. Using annual data on over 3000 US firms from 2007 to 2014, we show that the presence of women on the board has a positive effect on firm performance, and this effect varies at different parts of the performance distribution. Critically, we demonstrate that the presence of women directors alters the dispersion of firm performance. Our quantile regression results suggest that female directors have a significantly larger positive impact in high-performing firms relative to low-performing firms. The board gender diversity effect is not homogeneous as assumed in previous research. In addition, we account for the endogenous selection of women to the board. Using instrumental variable quantile regression, we find that in general there is a positive correlation between firm performance and board gender diversity. Overall, we suggest that boardroom gender diversity has an effect on both the conditional mean and the dispersion of firm performance, and quantile regression adds value to the empirical examination of the performance impact of board gender diversity.