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Women in top management and agency costs

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  • Jurkus, Anthony F.
  • Park, Jung Chul
  • Woodard, Lorraine S.
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    Abstract

    This study investigates gender diversity among the top managers of Fortune 500 firms and its effect on agency costs. The study finds that firms with a greater percentage of female officers present lower agency costs but that the negative relation is not robust when considering the endogeneity of diversity. The study also finds that external governance influences the relationship. Although increasing diversity does not reduce agency costs for all firms, the evidence shows that diversity is significantly negatively related to agency costs in firms in less competitive markets. The results suggest that increasing diversity in management can have beneficial effects for firms where strong external governance is absent.

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    File URL: http://www.sciencedirect.com/science/article/B6V7S-4Y7NJN7-1/2/1c550ffc5d573d4b753d61198e1e49bd
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 64 (2011)
    Issue (Month): 2 (February)
    Pages: 180-186

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    Handle: RePEc:eee:jbrese:v:64:y:2011:i:2:p:180-186

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Gender diversity Female officers Agency costs Corporate governance Firm performance Competitive product market;

    References

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    1. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
    2. Nina Smith & Valdemar Smith & Mette Verner, 2005. "Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms," CIE Discussion Papers 2005-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    3. Justin Wolfers, 2006. "Diagnosing Discrimination: Stock Returns and CEO Gender," NBER Working Papers 11989, National Bureau of Economic Research, Inc.
    4. David R. Graham & Daniel P. Kaplan & David S. Sibley, 1983. "Efficiency and Competition in the Airline Industry," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 118-138, Spring.
    5. Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2001. "Corporate Governance and Equity Prices," NBER Working Papers 8449, National Bureau of Economic Research, Inc.
    6. Mary E. Graham & Julie Hotchkiss, 2003. "Which industries are the best employers for women? an application of a new Equal Employment Opportunity Index," Working Paper 2003-11, Federal Reserve Bank of Atlanta.
    7. Oliver D. Hart, 1983. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 366-382, Autumn.
    8. Bruton, Garry D. & Keels, J. Kay & Scifres, Elton L., 2002. "Corporate restructuring and performance: An agency perspective on the complete buyout cycle," Journal of Business Research, Elsevier, vol. 55(9), pages 709-724, September.
    9. Moncrief, William C. & Babakus, Emin & Cravens, David W. & Johnston, Mark W., 2000. "Examining Gender Differences in Field Sales Organizations," Journal of Business Research, Elsevier, vol. 49(3), pages 245-257, September.
    10. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    11. Kee H. Chung & Stephen W. Pruitt, 1994. "A Simple Approximation of Tobin's q," Financial Management, Financial Management Association, vol. 23(3), Fall.
    12. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
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    Citations

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    Cited by:
    1. Cindy Truong, Yan Wendy Wu, 2014. "Female Bank Executives: Impact on Performance and Risk Taking Substitutes?," LCERPA Working Papers wm0067, Laurier Centre for Economic Research and Policy Analysis.

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