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Does Gender Diversity in the Boardroom Improve Firm Performance?

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  • Daunfeldt, Sven-Olov

    (HUI Research)

  • Rudholm, Niklas

    (HUI Research)

Abstract

The purpose of this paper is to investigate whether increasing gender diversity on the board of directors improves firm perfomance, using a data-set of 20,487 limited companies in Sweden during 1997-2005. We use a random-effects random-coefficients model to account for unobserved firm heterogenity. More gender diversity in the boardroom is found to have a negative impact on returns on total assets after two years. Thus, legal requirements to increase gender diversity on the board of directors might carry a cost in lower profitability.

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Bibliographic Info

Paper provided by HUI Research in its series HUI Working Papers with number 60.

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Length: 52 pages
Date of creation: 11 Apr 2012
Date of revision:
Handle: RePEc:hhs:huiwps:0060

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Related research

Keywords: board of directors; board diversity; corporate governance;

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References

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  1. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  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. Agrawal, Anup & Knoeber, Charles R., 1996. "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 31(03), pages 377-397, September.
  4. Eklund, Johan & Palmberg, Johanna & Wiberg, Daniel, 2009. "Ownership Structure, Board Composition and Investment Performance," Working Paper Series in Economics and Institutions of Innovation 172, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  5. Kevin Campbell & Antonio Mínguez-Vera, 2008. "Gender Diversity in the Boardroom and Firm Financial Performance," Journal of Business Ethics, Springer, vol. 83(3), pages 435-451, December.
  6. 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.
  7. Anup Agrawal & Charles R. Knoeber, . "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders (Revision of 29-94)," Rodney L. White Center for Financial Research Working Papers 08-96, Wharton School Rodney L. White Center for Financial Research.
  8. David A. Carter & Betty J. Simkins & W. Gary Simpson, 2003. "Corporate Governance, Board Diversity, and Firm Value," The Financial Review, Eastern Finance Association, vol. 38(1), pages 33-53, 02.
  9. Benjamin E. Hermalin & Michael S. Weisbach, 2001. "Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature," NBER Working Papers 8161, National Bureau of Economic Research, Inc.
  10. Bell, Linda A., 2005. "Women-Led Firms and the Gender Gap in Top Executive Jobs," IZA Discussion Papers 1689, Institute for the Study of Labor (IZA).
  11. Kini, Omesh & Kracaw, William & Mian, Shehzad, 1995. "Corporate takeovers, firm performance, and board composition," Journal of Corporate Finance, Elsevier, vol. 1(3-4), pages 383-412, April.
  12. Kenneth R. Ahern & Amy K. Dittmar, 2012. "The Changing of the Boards: The Impact on Firm Valuation of Mandated Female Board Representation," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 137-197.
  13. Val Singh & Susan Vinnicombe, 2004. "Why So Few Women Directors in Top UK Boardrooms? Evidence and Theoretical Explanations," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(4), pages 479-488, October.
  14. Anup Agrawal & Charles R. Knoeber, . "Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders (Revision of 29-94)," Rodney L. White Center for Financial Research Working Papers 8-96, Wharton School Rodney L. White Center for Financial Research.
  15. Rosenstein, Stuart & Wyatt, Jeffrey G., 1990. "Outside directors, board independence, and shareholder wealth," Journal of Financial Economics, Elsevier, vol. 26(2), pages 175-191, August.
  16. Renée B. Adams & Daniel Ferreira, 2007. "A Theory of Friendly Boards," Journal of Finance, American Finance Association, vol. 62(1), pages 217-250, 02.
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