The response of firm performance to female official leadership

This study provides novel evidence on female government officials’ influence on Chinese local listed companies’ performance, while distinguishing between local and non-local officials. Leveraging a comprehensive panel dataset from 1999 to 2017, we explore how shifts in the proportion and locality of female officials impact firm value over time. We find a distinctive pattern: local female officials consistently enhance firm value, with the effects significantly increasing over time. In contrast, non-local female officials initially exert a negative influence that diminishes over time, which becomes statistically insignificant in the long term. The main effect is notably stronger for companies led by female CEOs, as evidenced by consistently positive and significant interaction effects. Mechanism analysis identifies two primary value-creation channels: enhanced innovation through improved patent grant rates and reduced financial constraints via lower KZ index values. Further, heterogeneity analysis reveals that the effectiveness of female officials varies significantly across institutional contexts. State-owned enterprises benefit consistently from local female officials, whereas non-state enterprises show asymmetric responses: positive local effects but negative non-local impacts. Regional analysis reveals that coastal areas eventually transform initial adjustment costs into substantial long-term benefits, while non-coastal regions consistently benefit from local representation but suffer persistent negative effects from non-local officials. These results underscore the importance of gender diversity and local embeddedness in government leadership for promoting economic growth.