Investing in Female Corporate Leadership
53 Pages Posted: 25 Apr 2017 Last revised: 11 May 2019
Date Written: April 29, 2019
Using the top 1000 US firms from 2002 to 2015 as a tradable stock universe, we replicate and backtest five market-traded gender-diverse portfolios. We find evidence that gender-diverse firms have smaller volatility. Moreover, the gender-risk relationship is non-linear, with optimal female board ratio at 24% or 2-3 female directors. This significant non-linear gender-risk reduction effect is found in 8 out of 10 industries. We find that a gender-diverse board strongly reduces diversity and governance concerns. Moreover, we establish strong evidence that the gender-risk reduction effect is channeled through positive CSR (Corporate Social Responsibility) performance.
Keywords: Board Gender Diversity, Female Corporate Leadership, Gender Diverse Investment, Corporate Social Responsibility
JEL Classification: G12, G24, C22, C23, C24, C31
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