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Women in the Boardroom and Their Impact on Governance and Performance

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  • Adams, Ren辿e B.
  • Ferreira, Daniel
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    Abstract

    Although some argue that tokenism drives the selection of female directors, we show that they have a significant impact on measures of board effectiveness. In a large panel of data on publicly-traded firms from 1996-2003, we find that (1) the likelihood that a female director has attendance problems is 0.29 lower than for a male director, (2) male directors have fewer attendance problems the greater the fraction of female directors on the board, (3) firms with more diverse boards provide their directors with more payperformance incentives, and (4) firms with more diverse boards have more board meetings. We also show that the positive relationship between corporate performance measures and gender diversity documented by previous studies is not robust to attempts to address the endogeneity of diversity. Instead, the average effect of gender diversity on both market valuation and operating performance appears to be negative. This negative effect is driven by companies with greater shareholder rights. In firms with weaker shareholder rights, gender diversity has positive effects. Our results suggest that diverse boards are tougher monitors. Nevertheless, mandating gender quotas in the boardroom may not increase board effectiveness on average, but may reduce it for well-governed firms where additional monitoring is counterproductive.

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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/15730/1/WP2008-7a.pdf
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    Bibliographic Info

    Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2008-7.

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    Length: 40, [14] p.
    Date of creation: Apr 2008
    Date of revision:
    Handle: RePEc:hit:hitcei:2008-7

    Note: This version: September 2007
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    Related research

    Keywords: Board of Directors; Board Effectiveness; Gender; Diversit;

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    References

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    1. Andres Almazan & Javier Suarez, 2003. "Entrenchment and Severance Pay in Optimal Governance Structures," Journal of Finance, American Finance Association, vol. 58(2), pages 519-548, 04.
    2. Marianne Bertrand & Antoinette Schoar, 2003. "Managing With Style: The Effect Of Managers On Firm Policies," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1169-1208, November.
    3. Niessen, Alexandra & Ruenzi, Stefan, 2007. "Sex matters: Gender differences in a professional setting," CFR Working Papers 06-01, University of Cologne, Centre for Financial Research (CFR).
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    Cited by:
    1. Renée B. Adams & Patricia Funk, 2012. "Beyond the Glass Ceiling: Does Gender Matter?," Management Science, INFORMS, vol. 58(2), pages 219-235, February.
    2. David A. Matsa & Amalia R. Miller, 2011. "Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership," American Economic Review, American Economic Association, vol. 101(3), pages 635-39, May.
    3. Réal Labelle & Rim Makni Gargouri & Claude Francoeur, 2010. "Ethics, Diversity Management, and Financial Reporting Quality," Journal of Business Ethics, Springer, vol. 93(2), pages 335-353, May.
    4. Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
    5. Andrea Melis, 2011. "Martin Hilb: New corporate governance," Journal of Management and Governance, Springer, vol. 15(3), pages 509-514, August.
    6. Andrea Weber & Christine Zulehner, 2009. "Female Hires and the Success of Start-up Firms," NRN working papers 2009-28, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    7. Kandel, Eugene & Massa, Massimo & Simonov, Andrei, 2011. "Do small shareholders count?," Journal of Financial Economics, Elsevier, vol. 101(3), pages 641-665, September.
    8. Patricia Funk & Christina Gathmann, 2008. "Gender gaps in policy making: Evidence from direct democracy in Switzerland," Economics Working Papers 1126, Department of Economics and Business, Universitat Pompeu Fabra.
    9. Janet Spitz, 2010. "CEO Gender and the Malt Brewing Industry: Return of the Beer Witch, Ale-Wife, and Brewster," Forum for Social Economics, Springer, vol. 39(1), pages 33-42, April.

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