Guest Post: An overview of recent studies on gender diversity in the boardroom

Dr Aspasia Pastra, Researcher at the World Maritime University of Malmö and Research Associate at the Hellenic Observatory of Corporate Governance, contributes to today’s guest post:

A plethora of empirical research on corporate governance continues to study the gender diversity in the boardroom and the differences of women from male corporate directors in the effectiveness of the organisation. It has been widely accepted that boards in many industries are male-dominated and for this reason, various proposals have been made about imposing quotas in the boardroom. Women in management remains an issue of concern, given that an increasing number of women are in the workforce, but only a small percentage holds positions in the upper echelons of the organisations.

Over the course of the latest years, various studies have presented the significant effects in firm value and financial performance that stem from the female representation in the boards (e.g Apesteguia, Azmat & Iriberri, 2012; Bonn, Yoshikawa and Phan, 2004; Campbell & Mínguez-Vera, 2008; Carter, Simkins and Simpson, 2003; Croson and Gneezy, 2009; Erhardt, Werbel and Shrader, 2003; Gordini and Rancati, 2017;  Gul, Hutchinson and Lai 2013; Lückerath-Rovers, 2013; Post and Byron, 2015; Reguera-Alvarado, De Fuentes and Laffarga, 2014; Torchia, Calabro` & Huse, 2011). For example, Carter, Simkins and Simpson (2003) examined the association between board diversity and firm value in the context of agency theory and noted a significant positive relationship between the fraction of women on the board and firm value as measured by Tobin’s Q. Along the same lines, Gordini and Rancati (2017) found that gender diverse boards have a positive link on financial performance, measured by Tobin’s Q ratio. However, the authors noted that it is the percentage of females on the boards that matters since the presence of only one female has no significant effect on company performance. Erhardt, Werbel and Shrader (2003) found a positive relationship between the percentage of women on the boards of large U.S. firms and return on assets as well as return on investment. Gul, Hutchinson and Lai (2013) examined the link between gender diversity and analysts’ earnings forecast accuracy and they concluded that their proxies for properties of analyst earnings forecasts are significantly correlated with the presence of women on boards. A report published in 2011 illustrated that Fortune 500 companies achieved better financial performance, in terms of Return on Equity, Return on Sales and Return on Capital when women board directors were appointed.

On the other hand, there are researchers who have found no positive relationship between gender diversity and financial performance (e.g. Carter et al., 2010; Gallego, García & Rodríguez, 2010; Haslam et al. 2010; Rose, 2007). For instance, Haslam et al. (2010) in their study of FTSE 100 companies for the period 2001-2005, consistent with work by Adams, Gupta and Leeth (2009), found no relationship between women’s presence on boards and the profitability of the company, expressed by the return on assets and return on equity. The interesting aspect of the research was the negative link between women’s presence on boards and ‘subjective’ stock-based measures of performance.

Despite the contraindicatory effects of gender equality on the performance of the organisation, it is widely accepted that a gender diverse board is beneficial for the operation of the organization since various stakeholders with different needs are represented (Harjoto, Laksmana and Lee, 2015). Besides, females tend to be more risk-averse than males (Croson and Gneezy, 2009; Post and Byron, 2015), enrich the boardroom with different perspectives, skills and contribute to the effective decision making of the organisation.

Τhe current state of gender diversity in the boardroom

Various Western countries have taken initiatives to boost the participation of women on the board of listed companies. The country which has taken the most drastic measures is Norway which has imposed a 40% female quota on the board of directors of publicly listed companies. Germany and Iceland are some of the countries which have adopted mandatory quotas whereas Finland, Sweden and the UK have set voluntary schemes. The European Commission proposes to break the glass ceiling with legislation that will impose on publicly listed companies -to have 40% women in non-executive board-member positions.

According to Heidrick and Struggles’ 2018 Board Monitor report, female directors accounted for 38.3% of all newly named directors at Fortune 500 companies in 2017, and this was the highest number of appointments of women since 2009. However, the study underlines that an equal split in appointments for men and women will not be achieved till 2025. Despite the voluntary or mandatory schemes that exist in various countries around the world, the boards of directors in various industries remain still male-dominated. For instance, the Review of the Hellenic Observatory of Corporate Governance found that out of the 344 directors in the 34 Greek listed maritime companies for the period 2001-2015, 327 (95%) were men; while there were only 17 female directors (5%) showing a sharp discrepancy in the board composition between male and female.  As it has been reported in a document from the European Commission, although today 60% of new university graduates are female, women are outnumbered by men in leadership positions in the corporate sector in the EU: on average, a mere 17.8% of board members of the largest publicly listed companies in the EU are women.

It should also be noted that although quotas contribute significantly on gender equality on boards there may be arguments supporting that females cannot receive positions on company boards based on their own competence argument (Tienari et al. 2009).


Bringing a variety of perspectives and experiences seems to be a significant factor in the effectiveness of the organisation. One way to bring these diverse perspectives is through gender diversity on a board and appoint a diverse talent pool at the upper echelons of the organisation. Gender diversity is one of the most crucial dimensions of board composition since there is strong support that women directors’ leadership style enhances board decision-making and corporate governance quality. Increasing the percentage of women in the boards should be a priority for the owners and shareholders of each organisation who should change their priorities by focusing on women representation both at the c-suite and lower levels of the organisation.

As Fabrizio Freda – president and CEO of the Estée Lauder Companies – affirmed in the recent commentary “Straight talk about gender diversity in the boardroom and beyond” published by McKinsey: “People believe we are going to get there eventually. But that is not enough; it’s too slow. The real obstacle is the lack of urgency.” Corporations that would seriously carry out their business operations in a more responsible way should share such a sense of urgency and start changing things without any further delay.

Referencing List

Adams, S., Gupta, A. and Leeth, J. (2009). Are Female Executives Over-represented in Precarious Leadership Positions?. British Journal of Management, 20(1), pp.1-12.

Apesteguia, J., Azmat, G. and Iriberri, N. (2012). The Impact of Gender Composition on Team Performance and Decision Making: Evidence from the Field. Management Science, 58(1), pp.78-93.

Bonn, I., Yoshikawa, T. and Phan, P. (2004). Effects of Board Structure on Firm Performance: A Comparison Between Japan and Australia. Asian Business & Management, 3(1), pp.105-125.

Campbell, K. and Mínguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial Performance. Journal of Business Ethics, 83(3), pp.435-451.

Carter, D. A., D’Souza, F., Simkins, B. J., and Simon, W. G. (2010). The gender and ethnic diversity of US boards and board committees and firm financial performance. Corporate Governance: An International Review, 18(5), pp.396-414.

Carter, D., Simkins, B. and Simpson, W. (2003). Corporate Governance, Board Diversity, and Firm Value. The Financial Review, 38(1), pp.33-53.

Croson, R. and Gneezy, U. (2009). Gender Differences in Preferences. Journal of Economic Literature, 47(2), pp.448-474.

Erhardt, N., Werbel, J. and Shrader, C. (2003). Board of Director: Diversity and Firm Financial Performance. Corporate Governance, 11(2), pp.102-111.

Gallego, I., García, I. and  Rodríguez, L. (2010). The influence of gender diversity on corporate performance. Spanish Accounting Review, 13(1), pp.53-88.

Gordini, N. and Rancati, E. (2017). Gender diversity in the Italian boardroom and firm financial performance. Management Research Review. 40(1), pp.75-94.

Gul, F. A., Hutchinson, M. and Lai, K. M. (2013). Gender-diverse boards and properties of analyst earnings forecasts. Accounting Horizons, 27(3), pp.511–538.

Harjoto, M., Laksmana, I. and Lee, R. (2015). Board Diversity and Corporate Social Responsibility. Journal of Business Ethics, 132(4), pp.641-660.

Haslam, S. A., Ryan, M. K., Kulich, C., Trojanowski, G. and Atkins, C. (2010). Investing with prejudice: The relationship between women’s presence on company boards and objective and subjective measures of company performance. British Journal of Management, 21, pp.484-497.

Lückerath-Rovers, M. (2013). Women on boards and firm performance. Journal of Management & Governance, 17(2), pp.491-509.

Post, C. and Byron, K. (2015). Women on Boards and Firm Financial Performance: A Meta-Analysis. Academy of Management Journal, 58(5), pp.1546-1571.

Reguera-Alvarado, N., De Fuentes, P. and Laffarga, J. (2014). Does Board Gender Diversity Influence Financial Performance? Evidence from Spain. Journal of Business Ethics, 122(4), pp. 709-723.

Rose, C. (2007). Does female board representation influence firm performance? The Danish evidence. Corporate Governance: An International Review, 15(2), pp. 404-413.

Tienari, J., Holgersson, C., Meriläinen, S. and  Höök, P. (2009). Gender, Management and Market Discourse: The Case of Gender Quotas in the Swedish and Finnish Media. Gender, Work and Organization, 16(4), pp.501-521.

Torchia, M., Calabro, A. and Huse, M. (2011). Women directors on Corporate Boards: From tokenism to critical mass. Journal of Business Ethics, 102(2), pp.299–317.

10 thoughts on “Guest Post: An overview of recent studies on gender diversity in the boardroom

  1. Great piece Aspasia! Add to “A lack of urgency”, a lack of interest. And we should all spare a thought for ethnic minorities that are female! Double whammy!!
    This is an important CSR issue. It may not change however, until society expects more from boards. Having been in some AGMs, diversity seems to be added on at the end of business as an afterthought…as long as the profits look good and dividends have been assured. Boards and shareholders are happy but what about other stakeholders? Until “diversity dollars” (or whatever currency) ‘walks’ to diverse businesses alone, boards may not have any reasons to bother. It’s a ‘if it ain’t broke, why fix it’ mentality that needs to change and that change can be driven by conscious decisions based on knowledge, made by the populace. Campaigns against companies that have been involved in child slavery, environmental disasters, war minerals and so on come to mind here. I salute all of the research that has gone on and articles like yours and hope they will continue to be disseminated in plain language for everyday people to assimilate, to be able to make those vital decisions on where to spend their money. Consumer/client money and where they are spent will be the biggest motivation for change. What are your thoughts? Lola.

  2. Lola you raise interesting points in the gender diversity topic. Lack of urgency and lack of interest maintain the problem of low female participation in the boards. Motivation of all different stakeholders is of paramount importance, as well.

  3. Thank you for this updated view on the current state of boardroom gender diversity and for stressing the urgency for change! The boardroom is definitely a crucial place to ensure diversity trickles down and positively impacts the company as a whole. I was wondering what your view is on the benefits of mandatory boardroom gender quotas imposed by legislation (as the case of Norway or the EU Commission proposal you mentioned), as opposed to those voluntarily adopted by a company? In particular, which do you think could be most effective in ensuring that gender quotas lead to long-term and meaningful participation of women in the corporate decision-making process, rather than constituting mere compliance with numerical standards imposed by the law?

    1. Thank you Liemertje for the comments.
      Opponents of mandatory quotas doubt their effectiveness and fairness while advocators believe that via quotas, prejudices against women can be diminished. The most effective solution in the problem is to nurture in the society a sense of urgency and an in-depth understanding of the gender diversity issue. Policy makers should understand and promote the great benefits that stem from the contribution of female skills that lead to different perspectives which, in turn, can enrich board discussions.

  4. Thanks for sharing.. I think the article hones in on a very important point – diversity takes different forms, all of which can impact the effectiveness of a Board/Senior Management team. I believe we are sometimes too focused on equality instead of equity. This is about opportunity as equality is not always the optimal outcome when it comes to achievement of diversity. Equal representation, whatever form that takes, will not be appropriate in all circumstances. Its about the diversity that is required to bring about effective decision making.

  5. This is an instrumental piece of paper, which shows either woman are equal with men in the boardroom. It was attractive, and I like to post a comment in this area, which I think it may show a different point of view. So, good studies were mention in this article from a different perspective. This makes me wonder about my country or even the GCC countries as a case under this article. According to McKinsey 2016, if the women take an equal position as men around $28 trillion could be added to the global GDP by 2025. This show how women can positively affect income in the market place. I looked through an article “Gender diversity in the Gulf”, which show that most of GCC aspect the low gender diversity to the culture because they think that women have to stay at home rather than have a job, this may come under a social cause. However, according to McKinsey & Company research Women in the Workplace 2015 found that 15 per cent of mothers more interested in being a top executive than women without children. However, Oman is a very respective country for gender equality in general, but as a workplace, it takes me time to think and read about it.
    Moreover, if we look back in history will expose that Omani women were more authorised even before modern laws created. Omani families are ready to let their daughters go in for the careers they love and encourage them to pursue their dreams. Also, men are open to the idea of their women playing their parts in all areas of life, and society is open to new challenges. Despite that, there are some areas where women look forward to more openness but, at the moment they are keen on making the most of the available opportunities. Generally, in Oman, we can see women as a minister or as a manager in a big organisation. For instance, the Minister of education is a woman.

    Mazoun Al Shidi

  6. Thank you for this Aspasia. In my opinion the lack of board diversity is deep rooted, it stems from upbringing of a girl child. Like Chimamanda Ngonzi says “In our world, a woman is confident but a man is arrogant, a man is strategic but a woman is manipulative.” The world has limited a woman’s capabilities so narrowly that when she attempts to expand beyond the limits, she is considered a disgrace. This is more common in African countries where in some, a woman is still seen as a child-making machine. This lack of confidence instilled in a girl child makes it hard for many to strive or work aiming for the top- seats in corporations.

    Gender diversity on company boards is becoming an increasingly important issue (Kamalnath A, ‘Corporate Governance Case for Board Gender Diversity: Evidence from Delaware Cases.’ (2018). The theoretical basis for the desirability of gender diversity regulations can be understood under three categories: to exploit “social benefits of addressing inequality”; to exploit “business benefits” including increased profits and stock prices; and to exploit “corporate governance benefits” or more board functioning.

    Scholars have explained how diverse boards can perform better than homogenous boards, using theories of “group thinking” and explaining how a “critical mass” of minority or women directors would ensure that the full benefits of diversity are reaped.(Lisa M. Fairfax, The Bottom Line on Board Diversity, 2005). There is also some empirical work that has gone beyond merely checking for the effect of board diversity on firm performance. (Ionna Boulouta, 2013). Analysing these studies gives us an insight into how board diversity enhances efficiency.

    The first wave of empirical literature on board diversity focussed on the link between women directors and firm profits. (Bohren &Strom, Carter &Wagner). Women generally have a lower risk appetite; the recent financial crisis called into question some of the risky decisions taken by company management and approved by the board of directors. There was even a quip about the financial crisis turning out very different if Lehman Brothers was “Lehman sisters” instead. (Christine Lagarde). Neelie Kroes avers that women directors are more risk- averse and think about the long-term more than their male counterparts. This is necessary in the agency theory of corporate governance.

    Albeit board diversity in necessary and deemed effective, it at times has a negative effect. For example, in a 2008 study, Adams and Ferreira, analysing data from the U.S firms made the link between monitoring and women directors wherein it was noted that women directors have a tendency to overly monitor organizations and this in turn has a negative effect to wit decrease shareholder value.

    Consequently, board diversity plays a key role in effective corporate governance but these positions will not be handed down to unqualified people, the change therefore needs to begin with the girl child and her ambitions and capabilities. Withholding nothing and shooting for the stars.

  7. Dear Kitami, Thank you for your fruitful comments and contribution. I fully agree that board diversity is deeply rooted to cultural and societal values and relates to the upbringing of a girl child. Still the conclusion remains the same. The real obstacle is the lack of urgency. If policy makers and governments set this issue high in their agenda, then deeply rooted perceptions will start changing….

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