Does Female Management Influence Firm Performance? Evidence from Luxembourg Banks

Financial Markets and Portfolio Management (2016)

University of St. Gallen, School of Finance Research Paper No. 2015/01

33 Pages Posted: 14 Jan 2015 Last revised: 13 Jan 2017

See all articles by Regina Reinert

Regina Reinert

University of St. Gallen

Florian Weigert

University of Neuchatel - Institute of Financial Analysis; University of Cologne - Centre for Financial Research (CFR)

Christoph Winnefeld

Commission de Surveillance Du Secteur Financier

Date Written: March 31, 2016

Abstract

In this study we examine the relationship between the proportion of women in top management positions at banks and these institutions' financial performance. Using prudential data from supervisory reporting for all credit institutions in the Grand-Duchy of Luxembourg from 1999 to 2013, we find a positive association between female management and firm performance. The economic effect is substantial: a 10% increase in women in top management positions improves the bank's future return on equity by more than 3% p.a. Moreover, we show that this positive relationship is (i) almost twice as large during the global financial crisis than in stable market conditions and (ii) non-linear, with banks having 20%-40% female management being the most successful.

Keywords: management diversity, female management representation, bank performance

JEL Classification: G21, J16, L25, M14

Suggested Citation

Reinert, Regina and Weigert, Florian and Winnefeld, Christoph, Does Female Management Influence Firm Performance? Evidence from Luxembourg Banks (March 31, 2016). Financial Markets and Portfolio Management (2016), University of St. Gallen, School of Finance Research Paper No. 2015/01, Available at SSRN: https://ssrn.com/abstract=2548978 or http://dx.doi.org/10.2139/ssrn.2548978

Regina Reinert

University of St. Gallen ( email )

Dufourstrasse 50
St.Gallen, CH-9000
Switzerland

Florian Weigert (Contact Author)

University of Neuchatel - Institute of Financial Analysis ( email )

Pierre-a-Mazel,7
Neuchatel, CH-2000
Switzerland

University of Cologne - Centre for Financial Research (CFR) ( email )

Albertus-Magnus Platz
Cologne, 50923
Germany

Christoph Winnefeld

Commission de Surveillance Du Secteur Financier ( email )

Luxembourg
Luxembourg

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