Does Cooperation Among Women Enhance or Impede Firm Performance?
51 Pages Posted: 16 Aug 2017 Last revised: 14 Jul 2020
Date Written: July 8, 2020
Based on the notion that women cooperate more with women than with men, we investigate whether women managers work more effectively when monitored by women directors. We find that when a firm has women as its top managers, its accounting profitability increases with the proportion of women on the board of directors. However, the improvement in profitability is associated with earnings management. We show that women are likely to be appointed to precarious leadership positions, which puts pressure on them to ameliorate the weak earnings performance. Finally, consistent with the interaction between women resulting in an unfavourable response from investors, we document a negative stock market reaction to the appointment of female top managers in the presence of women on the board.
Keywords: Female interaction; top management; board of directors; firm performance; glass cliff
JEL Classification: G10, G34
Suggested Citation: Suggested Citation