The Token Woman

27 Pages Posted: 28 Aug 2012 Last revised: 5 Dec 2012

See all articles by Maria Strydom

Maria Strydom

Monash University

Hue Hwa Au Yong

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

Date Written: August 7, 2012


We examine gender diversity, its impact on firm performance and earnings quality and particularly whether a critical number of female directors are required to empower them to best fulfil their duties on corporate boards. The extant literature shows a positive association exists between diversity (measured as one woman on the board) and earnings quality, but no relationship with performance is documented. We propose these studies measure “tokenism” (having one woman on the board) rather than diversity (having enough female directors to empower them) and that a critical mass (number of women) is needed for “normalization” to occur allowing removal of the gender barrier (Asch, 1951). We therefore examine boards with three or more female directors in relation to firm performance and earnings management and show firms with at least three female directors significantly outperformed others and also have better earnings quality. True gender diversity therefore appears to be associated with improved performance; tokenism, on the other hand, is not.

Keywords: Gender diversity, firm performance, disclosure quality, corporate governance

JEL Classification: G30, G34, M41

Suggested Citation

Strydom, Maria and Au Yong, Hue Hwa, The Token Woman (August 7, 2012). 25th Australasian Finance and Banking Conference 2012, Available at SSRN: or

Maria Strydom (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800

Hue Hwa Au Yong

Monash University - Department of Banking and Finance ( email )

PO Box 197
Caulfield East, Victoria 3145

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane


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