Women in Top Management and Agency Costs
24 Pages Posted: 22 Jan 2008 Last revised: 28 Jan 2015
Date Written: February 28, 2008
This study investigates gender diversity among the top managers of Fortune 500 firms and its effect on agency costs. The study finds that firms with a greater percentage of female officers present lower agency costs but that the negative relation is not robust when considering the endogeneity of diversity. Moreover, the study finds that external governance influences the relationship. Although increasing diversity does not reduce agency costs for all firms, the evidence shows that diversity is significantly negatively related to agency costs in firms in less competitive markets. The results suggest that increasing diversity in management can have beneficial effects for firms where strong external governance is absent.
Keywords: Gender diversity, Female officers, Agency costs, Corporate governance, Firm performance
JEL Classification: M14, M54, G34
Suggested Citation: Suggested Citation