Do Female Directors Enhance R&D Performance?

Abstract

This study examines whether and how female directors enhance innovation performance. Based on a sample of U.S. firms, this study shows that firms with more female directors on boards present a more pronounced positive association between R&D and future firm performance (measured by earnings and operating cash flow), suggesting a positive impact of female directors on R&D performance. We also examine how female directors affect two intermediate R&D performance indicators, namely innovation output and productivity. Our results show that a higher number of female directors are associated with higher innovation output (measured by the sensitivity of patents and patent citations to R&D) and higher R&D productivity (measured by the sensitivity of future sales to R&D). In the further analysis, we trace the committee that each female director sits on and find that the better R&D outcomes brought by female directors are mainly driven by their monitoring rather than advisory role. Additionally, female directors enhance the R&D outcomes by attending more board meetings.

Keywords: Female Directors, R&D, Performance

JEL Classification: G30, G34, J16, O31, O34