Women on Boards and Firm Performance: A Microeconometric Search for a Connection

Marek Gruszczyński

doi:10.3390/jrfm13090218

Abstract

This paper discusses questions of the gender diversity of corporate boards vis-à-vis firm performance. Typically, researchers have asked if a female presence is associated with improved performance and more transparent governance. The paper’s first part reports on several econometric attempts in the quest to prove the existence of such an association. The primary outcome is that the results vary over geographical, cultural, and time settings. The study presented in the second part examines European firms’ annual reports from 2015. Binomial models, multiple regression, and quantile regression are applied resulting in the finding that female presence on a board is not significantly related to firm performance for this sample. Together with the picture that emerged from the paper’s first part, this result leads to the possibility that the search for an association between women on boards and company performance is not fundamental. Nevertheless, modern business societies worldwide may need to boost the female presence on managerial bodies. Current econometric evidence indicates that this is not harmful to corporate results.

Highlights

IntroductionTopics in corporate finance and corporate governance research include the examination of such aspects of corporate board structure as the presence of independent directors, the formation of committees, and recently the presence of women
Corporate Boards Vis-à-Vis Gender DiversityTopics in corporate finance and corporate governance research include the examination of such aspects of corporate board structure as the presence of independent directors, the formation of committees, and recently the presence of women
Multiple regression, and quantile regression, we find that, for this sample, female presence on boards of directors (BoDs) is not significantly related to firm performance

Summary

Introduction

Topics in corporate finance and corporate governance research include the examination of such aspects of corporate board structure as the presence of independent directors, the formation of committees, and recently the presence of women. Researchers have concentrated on various aspects of women’s presence in corporations, including the relationship between women on boards of directors (BoDs) and financial results. Pletzer et al (2015) present a meta-analysis of 20 studies from peer-reviewed journals that examine the possible relationship of female presence on corporate boards and firm financial performance. The authors explain that their analysis, unlike that of Post and Byron (2015), follows “a more rigorous and controlled methodological approach by investigating the relationship between percentage of females on corporate boards and firm financial performance, operationalized as return on assets, return on equity, and Tobin’s Q”. Before embarking on specific issues of methodology, we point to the paper by Ferreira (2015) who clearly subscribes to the view of this paper He states that research does not show a clear “business case for gender quotas”, nor does it support the contrary: that female participation on BoDs reduces firm profitability.

Methodological Considerations

Selected Empirical Studies

The Case of Norway

European Data

Findings

Conclusions