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Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity

Terjesen, Siri LU ; Couto, Eduardo Barbosa and Francisco, Paulo Morais (2016) In Journal of Management and Governance 20(3). p.447-483
Abstract

This study empirically analyzes whether gender diversity enhances boards of directors’ independence and efficiency. Using data from 3,876 public firms in 47 countries and controlling for a wide set of corporate governance mechanisms, we find that firms with more female directors have higher firm performance by market (Tobin’s Q) and accounting (return on assets) measures. The results also suggest that external independent directors do not contribute to firm performance unless the board is gender diversified. These results hold with respect to different estimation models and robustness tests. Overall, our findings provide evidence that the female directors enhance boards of directors’ effectiveness. Finally, we find that firms that are... (More)

This study empirically analyzes whether gender diversity enhances boards of directors’ independence and efficiency. Using data from 3,876 public firms in 47 countries and controlling for a wide set of corporate governance mechanisms, we find that firms with more female directors have higher firm performance by market (Tobin’s Q) and accounting (return on assets) measures. The results also suggest that external independent directors do not contribute to firm performance unless the board is gender diversified. These results hold with respect to different estimation models and robustness tests. Overall, our findings provide evidence that the female directors enhance boards of directors’ effectiveness. Finally, we find that firms that are concerned with board independence, and that firms in more complex environments are more likely to have gender-balanced boards.

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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Board of directors, Female directors, Firm performance, Independent directors, Return on assets, Tobin’s Q
in
Journal of Management and Governance
volume
20
issue
3
pages
37 pages
publisher
Springer New York
external identifiers
  • scopus:84921326633
  • wos:000408342700002
ISSN
1385-3457
DOI
10.1007/s10997-014-9307-8
language
English
LU publication?
yes
id
d65a7865-0a08-41ef-9560-599cbedc1a2b
date added to LUP
2016-11-22 07:41:54
date last changed
2017-09-18 11:31:01
@article{d65a7865-0a08-41ef-9560-599cbedc1a2b,
  abstract     = {<p>This study empirically analyzes whether gender diversity enhances boards of directors’ independence and efficiency. Using data from 3,876 public firms in 47 countries and controlling for a wide set of corporate governance mechanisms, we find that firms with more female directors have higher firm performance by market (Tobin’s Q) and accounting (return on assets) measures. The results also suggest that external independent directors do not contribute to firm performance unless the board is gender diversified. These results hold with respect to different estimation models and robustness tests. Overall, our findings provide evidence that the female directors enhance boards of directors’ effectiveness. Finally, we find that firms that are concerned with board independence, and that firms in more complex environments are more likely to have gender-balanced boards.</p>},
  author       = {Terjesen, Siri and Couto, Eduardo Barbosa and Francisco, Paulo Morais},
  issn         = {1385-3457},
  keyword      = {Board of directors,Female directors,Firm performance,Independent directors,Return on assets,Tobin’s Q},
  language     = {eng},
  month        = {09},
  number       = {3},
  pages        = {447--483},
  publisher    = {Springer New York},
  series       = {Journal of Management and Governance},
  title        = {Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity},
  url          = {http://dx.doi.org/10.1007/s10997-014-9307-8},
  volume       = {20},
  year         = {2016},
}