Examining the Relationship between Female Board Members and Firm Performance - a Panel Study of US Firms
African Journal of Finance and Management, 2009
20 Pages Posted: 30 Apr 2010
Date Written: June 27, 2009
Abstract
This study examines the relationship between female board members and firm performance for a panel of 250 US firms over the years 2000 and 2006 which marks an epic in gender equality and affirmative efforts. We have used GLS -fixed effect regression to estimate the relationship of four proxies representing the effect of female board members with four measures of firm performance. On one hand, the results find no positive and significant relationship between performance measures (of ROA, ROE, Tobin’s Q ratio and price at close) with gender influence, female employed pool, gender participation and gender mix. On the other hand, the Shannon index which measures the level of female representation inside the board room shows positive and significant relationship between gender and firm value. Therefore, different measures may give different results. Furthermore, our results show that well-performing firms tend to appoint more females to their boards so as to concede to government pressure. Moreover, since we find no strong evidence to justify gender selection as a way to increase firm performance other criteria such as independence and size may have an influence towards board effectiveness.
Keywords: female board members, firm performance, financial value, gender diversity
JEL Classification: G38, J16, M14
Suggested Citation: Suggested Citation