Despite the intuitive appeal of the argument that gender diversity on the board improves company performance, research suggests otherwise.
It is worth noting that gender diversity in other kinds of work teams is not significantly positively related to performance, either.
The average correlation between board gender diversity and firm accounting performance, Post and Byron found, was. Women Directors and Other Dimensions of Company Performance While the relationship between board gender diversity and company performance is very weak, there appears to be a somewhat stronger relationship between board gender diversity and corporate social responsibility CSR.
The average correlation between board gender diversity and firm market performance such as stock performance, shareholder returns was even smaller and was not statistically significant. But, is this good or bad for Effect of board diversity on firms performance?
The relationship between CEO gender and long-term company performance is statistically significant, the authors find, but tiny. Other things being equal, market analysts may, consciously or unconsciously, regard all-male boards as more competent than boards that are more gender-diverse.
Klein is also the vice dean of the Wharton Social Impact Initiative. The women named to corporate boards may not in fact differ very much in their values, experiences, and knowledge from the men who already serve on these boards.
If so, board gender diversity may be positively related to accounting returns, but not market returns. By and large, the obverse is true: The average correlation is. Similarly, the relationship of top management team TMT gender diversity and company performance is statistically significant but very small.
The fact that two quite distinctive meta-analyses reached nearly identical conclusions carries a lot of weight. Post and Byron synthesized the findings from studies of board gender diversity with a combined sample of more than 90, firms from more than 30 countries.
Despite popular press accounts that suggest that teams high in gender diversity outperform those composed only of men or only of women, rigorous research does not support this conclusion. The authors conclude the following: Even if women who are named to corporate boards are different from the men on these boards and even if the women do speak up and influence board decision-making, their influence may not be consistently positive or consistently negative, for that matter.
Many popular press articles and fund managers make this claim, citing studies by consulting firms, information providers and financial institutions, such as McKinsey, Thomson Reuters and Credit Suisse.
Wealth of Data on Board Gender Diversity There have been many rigorous, peer-reviewed studies of board gender diversity. Given global interest in the effects of board gender diversity and the availability of abundant data on board gender composition and firm performance, many researchers have investigated the topic.
Byron and Post meta-analyzed the results of 87 studies and found that board gender diversity is weakly but significantly positively correlated with CSR. Quote Many commentators suggest that gender diversity in the corporate boardroom improves company performance because of the different points of view and experience it offers.
The two meta-analyses reached very similar conclusions, despite the differences in the underlying studies studies vs. Consider two recent meta-analyses that have been conducted to summarize prior research on the topic. After all, both male and female board members are likely to be selected for their professional accomplishments, experience, and competence.
So, a tiny effect is statistically significant if the sample is big enough. However, rigorous, peer-reviewed academic research paints a different picture. It signals an end, or at least the beginning of an end, to gender exclusivity in firm leadership.
Do companies with women on the board perform better than companies whose boards are all-male? To establish causal effects, you need to conduct a randomized control trial.
Writing recently on Huffington Post, for example, one consultant observed the following: The modest size of the positive effects helps explain ambiguity and inconsistency in prior scholarship past research has been triangulating on a weak signal in a noisy fieldand they caution against overclaiming about strong or causally dependable financial benefits Eagly, Because meta-analyses provide a statistical summary — a sophisticated averaging — of the results of prior studies, their findings are much more credible than the findings of any single study.
Still, given all the studies of board diversity and company performance that have been conducted to date, it seems very unlikely that new research will reveal a strong, clear relationship between board diversity and company performance.
By studying outcomes that are more proximal or immediately related to board decision-making than is company performance, researchers may shed more light on when, whether, and how diverse boards differ from all-male boards.
And even when individuals who are minorities, tokens, or outliers speak up, the majority group members may discount their views.
If these dynamics occur within corporate boards, boards may not take full advantage of their own cognitive variety. Companies that engage in CSR, or intend to do so, may be particularly inclined to appoint women to the board. CEO Gender and Firm Performance Given the findings of research on board gender diversity, one might wonder about the effects on company performance of CEO gender and top management team gender diversity.
Yet, the answers have not been clear or consistent.This study examines the effects of board characteristics and sustainable compensation policy on carbon reduction initiatives and greenhouse gas (GHG) emissions of a firm. We use firm fixed effect model to analyse data from non-financial UK firms covering a period of 13 years (–).
a. To establish effect of age diversity of board of directors on firm‟s capital structure b. To establish effect of‟ gender diversity of board of directors on firm‟s capital structure c.
To determine effect of ethnic diversity of board of directors on firm‟s capital structure d. Eulerich et al. () analysed the influence of board diversity in terms of gender, age, nationality and functional diversity in German management boards on corporate performance empirically by using a sample of listed firms for the yearsand and they mostly found negative effects of board diversity characteristics on corporate performance, especially regarding age and national diversity.
(ROE) over time to study the effect of board gender diversity on the long-term financial performance of the firm. Overall, our results suggest that firms with more gender diversity. Given global interest in the effects of board gender diversity and the availability of abundant data on board gender composition and firm performance, many researchers have investigated the topic.
The research literature includes over studies of firms in 35 countries and five continents. Purpose This study aims to include two primary goals. First to determine the board characteristics of listed companies in Turkey and second to investigate the effect of board gender diversity on the performance of these companies.
Design/methodology/approach This study uses an instrumental variables regression analysis to investigate the relationship between board gender diversity and firm.Download