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Board gender diversity and firm performance: The UK evidence
Author(s) -
Brahma Sanjukta,
Nwafor Chioma,
Boateng Agyenim
Publication year - 2021
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.2089
Subject(s) - endogeneity , gender diversity , diversity (politics) , accounting , representation (politics) , return on assets , demographic economics , economics , corporate governance , econometrics , finance , political science , law , profitability index , politics
This article examines the relationship between gender diversity, selected female attributes, and financial performance of FTSE 100 firms in the UK. Drawing on critical mass theory by measuring gender diversity as levels of female representation in the boardroom, this study finds a positive and significant relationship between gender diversity and firm performance. However, the results become highly significant and unequivocal when three or more females are appointed to the board compared to the appointment of two or less females. Further analysis reveals that post‐appointment financial performance is positively related to female age, level of education and where female board members also hold executive director positions. The results remain unchanged after accounting for endogeneity concerns and employing alternative measures of firm performance, namely, return on assets and Tobin's Q.