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Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a 'Critical Mass'?

23 Pages Posted: 22 Feb 2012 Last revised: 29 Aug 2012

Jasmin Joecks

University of Tuebingen - School of Business and Economics

Kerstin Pull

University of Tuebingen - School of Business and Economics

Karin Vetter

University of Tuebingen

Date Written: February 22, 2012

Abstract

The under-representation of women on boards is a heavily discussed topic – not only in Germany. Based on critical mass theory and with the help of a hand-collected panel data set of 151 listed German firms for the years 2000-2005, we explore whether the link between gender diversity and firm performance follows a U-shape. Controlling for reversed causality, we find evidence for gender diversity to at first negatively affect firm performance and – only after a “critical mass” of about 30 percent women has been reached – to be associated with higher firm performance than completely male boards. Given our sample firms, the critical mass of 30 percent women translates into an absolute number of about three women on the board and hence supports recent studies on a corresponding “magic number” of women in the boardroom.

Keywords: diversity, gender, supervisory board, performance

JEL Classification: G30, J16

Suggested Citation

Joecks, Jasmin and Pull, Kerstin and Vetter, Karin, Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a 'Critical Mass'? (February 22, 2012). Available at SSRN: https://ssrn.com/abstract=2009234 or http://dx.doi.org/10.2139/ssrn.2009234

Jasmin Joecks (Contact Author)

University of Tuebingen - School of Business and Economics ( email )

Wilhelmstr. 19
72074 Tuebingen, Baden Wuerttemberg 72074
Germany

Kerstin Pull

University of Tuebingen - School of Business and Economics ( email )

Nauklerstr. 47
Tuebingen, D-72074
Germany

Karin Vetter

University of Tuebingen ( email )

Nauklerstr. 47
72074 Tuebingen, Baden Wuerttemberg 72074
Germany

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