Does Board Gender Diversity Matter?
34 Pages Posted: 24 Jun 2020
Date Written: June 1, 2020
We analyze the relationship between the proportion of women directors on the boards of UK listed firms and their financial performance and risk. We find that firms with greater gender diversity are more profitable and enjoy higher market valuations. However, consistent with prior research, we do not find any reliable evidence to suggest that gender diversity affects stock returns or risk. Our findings make two important contributions to the literature. First, we show that greater representation of women on boards is not merely an issue about social inclusion but it is economically beneficial. Second, the UK’s approach of using voluntary targets to increase the board gender diversity seems to be effective.
Keywords: Gender diversity, Corporate Governance, Market Efficiency, Board Size, Board Diversity
JEL Classification: G14, G32
Suggested Citation: Suggested Citation