Women in the boardroom and corporate decisions of Italian listed companies

Abstract

PurposeThe purpose of this paper is to investigate the relationship between women in the board of directors, firm performance and corporate decisions as well as the risk of the firm, debt level, and research and development (R&D).Design/methodology/approachThis study investigates a sample of 41 Italian listed companies. In particular, using a panel data of 369 firm-year observations, during the period 2005-2013, through a generalized method of moment, the relationship between women in the board of directors and corporate decisions has been investigated.FindingsThe results suggest that female representation in the board of directors affects corporate decisions. Women in the boardroom affect both financing and investment decisions. In particular, the presence of women seems to take on a complementary role to debt; it has a negative effect on risk and appears to have a positive impact on investment in R&D The results also suggest a strong relationship between female directors and firm value, especially when certain multicultural factors are considered. Finally, considering the concept of “critical mass,” in line with the arguments of Kanter (1977), the results seem to emphasize a greater influence of women with respect to corporate decisions, moving from “tokenism” to a “critical mass” scenario.Practical implicationsThe outcomes of the application, besides improving the current knowledge on the relationship between female representation in the board of directors, innovation, financial, and accounting decisions, intend to reveal if the governance of Italian listed companies is efficient in determining company results and in pursuing optimal decisions. Moreover, the results could be useful for both policy makers for the regulation of corporate governance and the board of directors and as a suggestion to companies that regularly appoint the members of the board of directors.Originality/valueThe work is not limited to examining the relationship between female representation and the performance of firms but instead uses a series of indicators of corporate decisions and multicultural, such as, the nationality of women in board of directors, the educational level, the past experience, and their interaction with the variables concerning the decision-making process. To the best knowledge of authors, this is the first study that investigates the relationship between women and corporate decisions in a single civil law country.