'Girl Power': Female Participation in Top Management and Firm Performance

Abstract:     
Scholars and practitioners have long argued that females exhibit a distinctive and particularly effective managerial style. Yet, less than a third of the largest U.S. corporations have a single female senior executive, raising the question of whether women are in fact effective as senior managers, and, if so, under what circumstances.

We address this issue by studying the relationship between female participation in senior management and firm performance as measured by Tobin's Q. We find a positive association between firm performance and female participation below the CEO level, even when controlling for unobservable firm heterogeneity, but no positive effects from having a female CEO. We then show that the positive results for female participation are entirely driven by firms pursuing an "innovation intensive" strategy, where creativity and collaboration may be especially important. Our findings thus provide evidence for a "female management style" that enhances firm performance by facilitating teamwork and innovation but is rendered less effective by the leadership attributes of the CEO position.

Given these results, the fact that not all firms have women in senior positions also suggests that an ability to identify, attract, and develop female managerial talent may be a source of competitive advantage.

Working Paper Series