The Economic Consequences of a 'Glass-Ceiling': Women on Corporate Boards and Firm Value

AFA 2016 San Francisco Meetings Paper

56 Pages Posted: 25 Oct 2013 Last revised: 5 Dec 2018

See all articles by Thomas Schmid

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics

Daniel Urban

Erasmus University Rotterdam (EUR) - Department of Business Economics

Date Written: December 4, 2018

Abstract

Less than 15% of global board seats are held by women. The economic consequences of this low representation of women at the top of corporations are not well understood. One potential effect of a more rigorous selection of female board members is that those few who make it to the top exhibit superior qualifications. To investigate how women on corporate boards affect firm value, we analyze capital market reactions to exogenous board member departures due to death or illness. The market reacts about one percentage point more negatively to departures of women compared to men. This negative reaction is more pronounced in countries where the selection of women is more stringent and fewer women serve on boards. Thus, women on boards seem to provide economic benefits not because of their gender, but due to an omitted variable related to gender - higher qualifications resulting from more rigorous selection. These results imply that gender-biased selection processes lead to sub-optimal economic outcomes.

Keywords: Female board representation, firm value, exogenous departures, glass-ceiling

JEL Classification: G32, G34

Suggested Citation

Schmid, Thomas and Urban, Daniel, The Economic Consequences of a 'Glass-Ceiling': Women on Corporate Boards and Firm Value (December 4, 2018). AFA 2016 San Francisco Meetings Paper. Available at SSRN: https://ssrn.com/abstract=2344786 or http://dx.doi.org/10.2139/ssrn.2344786

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Daniel Urban (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Business Economics ( email )

Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
1,144
Abstract Views
6,298
rank
17,435
PlumX Metrics