Board Gender Diversity, Innovation and Firm Performance
78 Pages Posted: 18 May 2015 Last revised: 1 Dec 2015
Date Written: Nov 30, 2015
We find that firms with more gender-diverse boards achieve greater innovative success. The results are not driven by endogenous matching between female directors and firms with high innovative potential. Investigating the underlying mechanisms, the positive effect of gender diversity on innovation is stronger when product market competition is lower and when managers are more entrenched, consistent with increased monitoring by female directors improving manager’s incentives to innovate. Furthermore, we find that although gender diversity does not enhance firm performance on average, it increases the performance of firms for which innovation and creativity play a particularly important role.
Keywords: Gender diversity; Board of directors; Innovation; Firm performance
JEL Classification: G30, G34, J16, O31, O34
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