Impacts of gender diversity on corporate performance: A study of board of directors and top management

Abstract

The recent scandal of a woman tycoon in Vietnam manipulating the whole governance system of a big public bank challenges our traditional view of women’s minor role and revives the research question of whether female members of boards and top management do impact performance. This study examines the association between the gender diversity of a company’s board of directors and top management and its corporate performance controlled for corporate capabilities and other governance aspects. By analyzing 1,710 observations of 342 listed corporations in an emerging market of Vietnam, using generalized least squares (GLS) regression, the authors found that gender diversity in terms of female chief executive officer (CEO) presence, percentage of women on boards, and a minimum of three female board members have significant positive effects on corporate performance measured by return on assets (ROA). This research contributes to the literature on corporate board and governance by combining three theories, using critical mass theory at a higher level of hypothesis development, and finding conclusive evidence of women’s positive role. The findings also add a new voice from a less-researched region to support a recent view encouraging women to participate in the business world and suggest implications for women, corporate leaders, and governments