Board Gender Diversity and Firm Performance: Evidence from Supply-Side Shocks in China
62 Pages Posted: 14 Nov 2019
Date Written: November 4, 2019
This paper identifies a positive causal effect of board gender diversity on firm performance by utilizing unique historical events in China. Specifically, the Famine resulted in an evident gender gap in the supply of qualified directors of certain cohorts. Since the shocks differ in both gender and cohorts, we construct a novel "Diff-in-Diff'" instrumental variable and a Bartik instrument for board gender representation. We find that a 10% increase in board female representation can lead to a 2.38% increase in return on assets (ROA). Moreover, our results support the critical mass theory and indicate that female directors are beneficial by lowering risk levels and improving solvency.
Keywords: board gender diversity, firm performance, causal effect, instruments
JEL Classification: G32, M14
Suggested Citation: Suggested Citation