Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms

Corporate governance literature argues that board diversity is potentially positively related to firm performance. This study examines the relationship in the case of women in top executive jobs and on boards of directors. We use data for the 2500 largest Danish firms observed during the period 1993-­2001 and find that the proportion of women in top management jobs tends to have positive effects on firm performance, even after controlling for numerous characteristics of the firm and direction of causality. The results show that the positive effects of women in top management depend on the qualifications of female top managers.

[1]  Daniel Wolfenzon,et al.  The Family behind the Family Firm: Evidence from CEO Transitions , 2004 .

[2]  P. W. Macavoy,et al.  The Active Board of Directors and Improved Performance of the Large Publicly-Traded Corporation , 1998 .

[3]  Francisco Pérez-Gónzalez,et al.  Inside the Family Firm: The Role of Families in Succession Decisions and Performance , 2006 .

[4]  Joe S. Bain,et al.  Relation of Profit Rate to Industry Concentration: American Manufacturing, 1936–1940 , 1951 .

[5]  Sanjai Bhagat,et al.  The Uncertain Relationship between Board Composition and Firm Performance , 1997 .

[6]  O. Richard,et al.  CULTURAL DIVERSITY IN MANAGEMENT, FIRM PERFORMANCE, AND THE MODERATING ROLE OF ENTREPRENEURIAL ORIENTATION DIMENSIONS , 2004 .

[7]  T. Cox,et al.  Managing cultural diversity: implications for organizational competitiveness , 1991 .

[8]  Azura Omar,et al.  Women in management: a comparative cross‐cultural overview , 2001 .

[9]  Kathleen Dechant,et al.  Building a business case for diversity , 1997 .

[10]  A. Murray.  Top management group heterogeneity and firm performance , 1989 .

[11]  Yupana Wiwattanakantang,et al.  Controlling Shareholders and Corporate Value: Evidence from Thailand , 2001 .

[12]  W. G. Marshall,et al.  Tobin's q and the Structure-Performance Relationship: Reply , 1984 .

[13]  D. Yermack.  Higher market valuation of companies with a small board of directors , 1996 .

[14]  Daniel Ferreira,et al.  Understanding the Relationship between Founder-CEOs and Firm Performance , 2008 .

[15]  Betty J. Simkins,et al.  Corporate Governance, Board Diversity, and Firm Value , 2003 .

[16]  Magnus Henrekson,et al.  Testing the Female Underperformance Hypothesis , 2007 .

[17]  Clare Rigg,et al.  Gender, Diversity and Working Styles , 1994 .

[18]  Size Really Matters: Further Evidence on the Negative Relationship Between Board Size and Firm Value , 2005 .

[19]  S. Jackson,et al.  Top management and innovations in banking: Does the composition of the top team make a difference? , 1989 .

[20]  Øyvind Bøhren,et al.  Aligned, Informed, and Decisive: Characteristics of Value-Creating Boards , 2007 .

[21]  M. V. van Engen,et al.  Transformational, transactional, and laissez-faire leadership styles: a meta-analysis comparing women and men. , 2003, Psychological bulletin.

[22]  Lynda St. Clair,et al.  Effects of Family Responsibilities, Gender, and Career Identity Salience on Performance Outcomes , 1992 .

[23]  Terry G. Seaks,et al.  Functional Form in Regression Models of Tobin's q , 1993 .

[24]  B. Coffey,et al.  Board Diversity and Managerial Control as Predictors of Corporate Social Performance , 1998 .

[25]  Victoria Krivogorsky.  Ownership, board structure, and performance in continental Europe , 2006 .

[26]  C. Earley,et al.  Creating hybrid team cultures: An empirical test of transnational team functioning. , 2000 .

[27]  Hema A. Krishnan,et al.  A few good women—on top management teams , 2005 .

[28]  Phyllis Tharenou,et al.  How do you Make it to the Top? An Examination of Influences on Women's and Men's Managerial Advancement , 1994 .

[29]  M. Hudaib,et al.  Corporate Governance Structure and Performance of Malaysian Listed Companies , 2005 .

[30]  H. N. Butler,et al.  Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition , 1985 .

[31]  L. Bell.  Women-Led Firms and the Gender Gap in Top Executive Jobs , 2005, SSRN Electronic Journal.

[32]  Dechun Wang,et al.  Founding Family Ownership and Earnings Quality , 2006 .

[33]  Sung Wook Joh,et al.  Corporate governance and firm profitability: evidence from Korea before the economic crisis , 2003 .

[34]  R. D. Adler,et al.  Women in the Executive Suite Correlate to High Profits , 2003 .

[35]  Andrei Shleifer,et al.  Corporate Ownership Around the World , 1998 .

[36]  S. Jackson.  Diversity in the Workplace: Human Resources Initiatives , 1992 .

[37]  J. Weimer,et al.  A Taxonomy of Systems of Corporate Governance , 1999 .

[38]  Taylor Cox,et al.  The multicultural organization , 1991 .

[39]  Ronald J. Burke,et al.  Do Women at the Top Make a Difference? Gender Proportions and the Experiences of Managerial and Professional Women , 1996 .

[40]  Martin T. Wells,et al.  Larger board size and decreasing firm value in small firms 1 We wish to thank Asiakastieto Oy for fu , 1998 .

[41]  The Separation of Ownership and Control in East Asian Corporations , 1999 .

[42]  Julie Siciliano,et al.  The relationship of board member diversity to organizational performance , 1996 .

[43]  Charles B. Shrader,et al.  Women In Management And Firm Financial Performance: An Exploratory Study , 1997 .

[44]  John O. S. Wilson,et al.  Industrial Organisation: An Analysis of Competitive Markets , 2001 .

[45]  Charles B. Shrader,et al.  Board of Director Diversity and Firm Financial Performance , 2003 .

[46]  Ajay Mehra,et al.  Top Management-Team Diversity and Firm Performance: Examining the Role of Cognitions , 2000 .

[47]  Kanak Gautam,et al.  The effects of board size and diversity on strategic change , 1994 .

[48]  Linda M. Parsons,et al.  Getting to the Bottom Line: An Exploration of Gender and Earnings Quality , 2006 .

[49]  Susan Vinnicombe,et al.  Why so Few Women Directors in Top UK Boardrooms? Evidence and Theoretical Explanations , 2004 .

[50]  J. Granleese.  Occupational pressures in banking: gender differences , 2004 .

[51]  H. Ibarra.  Personal Networks of Women and Minorities in Management: A Conceptual Framework , 1993 .

[52]  Blair T. Johnson,et al.  Gender and Leadership Style: A Meta-Analysis , 1990 .

[53]  D. Hambrick,et al.  Upper Echelons: The Organization as a Reflection of Its Top Managers , 1984 .

[54]  David Laing,et al.  Internal and external governance mechanisms: their impact on the performance of large UK public companies. , 2002 .

[55]  Theresa S. Cho,et al.  The Influence of Top Management Team Heterogeneity on Firms' Competitive Moves , 1996 .

[56]  Roderick E. White,et al.  Top management teams and organizational renewal , 1989 .

[57]  Marc Cowling,et al.  Family Firm Research: The Need for a Methodological Rethink , 1998 .

[58]  David A. Jaeger,et al.  Problems with Instrumental Variables Estimation when the Correlation between the Instruments and the Endogenous Explanatory Variable is Weak , 1995 .

[59]  Jonathan S. Leonard,et al.  The effects of diversity on business performance: Report of the diversity research network , 2003 .

[60]  Sean Dwyer,et al.  Gender diversity in management and firm performance: the influence of growth orientation and organizational culture , 2003 .

[61]  Anup Agrawal,et al.  Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders , 1995 .

[62]  Lars Oxelheim,et al.  The Impact of Foreign Board Membership on Firm Value , 2003 .

[63]  Christoph Treichler.  Diversity of Board Members and Organizational Performance: An integrative perspective , 1995 .