The Role of Gender Diversity in Corporate Governance

Abstract

A number of studies show that companies with more women involved in leadership positions tend to outperform their sector in terms of return on equity, operating result, and stock price growth. A diverse board may signal independence, creative thought, opportunities for breakout strategies and an open-mindedness on the part of the company -- traits that are increasingly important as external factors such as globalization and heightened competitiveness impact the marketplace. Having women in key positions may add value through women’s distinctive set of skills, and creating cultures of inclusion through a diverse workforce. This paper begins with a review of studies analyzing gender diversity and firm performance, followed with an analysis of role incongruity and gender inequality in the workplace. The paper continues with examination of the multitude of revelations concerning egregious incidents of sexual harassment, which may go a long way toward explaining the apparent barriers present for women pursuing pathways to positions of organizational leadership. We then offer our proposals for potential solutions involving changing company norms.