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Title: Effect of Women on the Board of Directors on Firm Performance Date: 30 - 01-2017
Name: Bart van Til
Student number: 10013822 Supervisor: Sabina Albrecht
Academy: University of Amsterdam Study: Economics and Business
Specialization: Finance and Organization Credits: 12 EC s
Abstract
The goal of this research is to find whether the presence of women on the board of directors has an influence on firm performance. The presence of women is measured as a percentage of the board members who are female and firm performance is measured in return on assets and return on equity. 646 North-American firms with total assets of at least 1 billion dollars have been examined over the years 2007 - 2015. In this time period, the financial crisis of 2008 - 2009 took place. Therefor it will also be examined of the presence of women on the board of directors associates with firm performance in time of a financial crisis. The results do not show any statistical evidence that the presence of women on the board of directors correlates with firm performance. No evidence for a correlation between firm performance and the presence of women on the board of directors in the financial crisis is found either.
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Statement of Originality
This document is written by Student Bart van Til who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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1 Introduction ... 4
2 Literature ... 5
2.1 Negative effects on firm performance ... 5
2.2 Positive effects on firm performance ... 6
2.3 Financial crisis ... 7 2.4 This research ... 7 3 Data ... 8 3.1 Data collection ... 8 3.2 Descriptive data ... 9 4 Method... 10 5 Hypotheses ... 12 6 Results ... 13 6.1 Main question ... 13 6.2 Sub question ... 13 7 Conclusion ... 16 8 Discussion ... 17 9 Bibliography ... 18
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1 Introduction
Over the last decades a big social discussion has been going on over the appointment of women on the board of directors of firms. Some countries have already imposed quotas to make sure that a certain percentage of the board of directors is female, like Norway did in 2003. The Norwegian government imposed a quota of 40 percent (Ahern and Dittmar, 2012). In November 2012 the European Commission proposed a legislation to ensure that listed companies within the European Union have a board of directors where at least 40 percent of the directors is female by 2020, except for small and medium sized enterprises (European Commission, 2012). A lot of studies on the effect of board of directors on firm performance have already been performed. This could be due to the fact that the most important factor to the success of a company are the people working for the company (Barney, 1991). He states that human capital resources are key to a competitive advantage and management capabilities are one of the most difficult characteristics to imitate for competitors.
To find if the presence of women on the board of directors is desirable, from a firm performance point of view, in this thesis the effect of the presence of women on the board of directors on firm performance will be tested. This leads to the main hypothesis of this research: The presence of women on the board of directors does not influence the firm performance. To test this, 646 large North-American companies have been examined over the years 2007-2015.
In this thesis first an overview of the existing literature will be discussed. Then the data and research method will be presented. Finally the results of the research will be presented and discussed.
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2 Literature
There have been a lot of studies focused on gender diversity in companies in many different forms. In this section the studies relating to this thesis, studies about gender diversity on the board of directors, will be presented and discussed.
2.1 Negative effects on firm performance
Shrader et al. (1997) research if the presence of women on the board of directors is associated with firm performance. They say that companies underutilize human resources. These
underutilized resources almost always include the less represented population on board of directors, like women and people of different racial or ethnic backgrounds. These minorities on the board of directors could bring different perspectives to a firm. Contrary to their hypothesis, they find a significant negative result between the percentage of women on the board of directors and firm performance measured in return on assets. They do however say that these are short-term effects and that the long- term effects of women on the board of directors on performance need to be examined in much more detail.
Ahern and Dittmar (2012) exploit the exogenous variation in board composition of companies between one year and the next due to a governmental reform imposing a quota. This quota was imposed by the Norwegian government in December 2003 and obligated companies that at least 40 percent of the board members had to be female by July 2005, while at the time on average only 9 percent was. Ahern and Dittmar (2012) find a significant
negative effect on firm performance, measured in Tobin’s Q for the rise of female percentage on the board of directors in Norway. For a 10 percent rise in the female percentage of board members, they find a decline in Tobin’s Q of 12,4 percent. The fact that the quota resulted in a negative effect on firm value is consistent with the theory that the board of directors is chosen to increase firm value and thus imposing a limitation on the preferred composition leads to a decline in firm value.
The new female directors that were appointed differed a lot from the retained male directors. The female directors were on average 8 years younger than the male directors, they were more likely to be highly educated and had less prior CEO experience. Only 31.2 percent of the female directors had prior CEO experience, against 69,4 percent of the male directors. These differences in personal characteristics could be the reason for the decline in firm value, since these characteristics are likely to directly influence a board member’s ability to monitor
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and advise the CEO (Ahern and Dittmar, 2012), the ways by which members of the board of directors could add value to a firm (Fama and Jensen, 1983).
2.2 Positive effects on firm performance
There have also been studies that argue that the presence of woman on the board of directors has a positive influence on the firm performance.
Adams and Ferreira (2009) investigate what impact women on the board of directors have on governance and on firm performance. To find if the presence of women on the board of directors has a positive effect on the firm performance, they also focus on the differences between male and female board members. There a lot of differences between male and female board members. First of all, women appear to behave different than men when it comes to attendance behavior. Men are more likely to have attendance problems than women. This also seems to affect the attendance behavior of the male board members, because the greater the fraction of women on the board is, the higher is the attendance rate of the male board members. The attendance rate is an important measure, because the primary way to obtain information for board members to carry out their duties, is by attending board meetings. Another important measure Adams and Ferreira use, is the assigning of board members to board committees. This is because a member of the board of directors is more likely to have an influence on the governance of a company if that board member sits on key committees. Male directors are less likely to sit on monitoring-related committees than female directors, when other director characteristics are held constant. Female directors are more likely to be assigned to key committees as nominating, corporate governance and auditing committees. Male directors however are more likely to be assigned to compensation committees than female directors are (Adams and Ferreira, 2009). In their prior research, however, Adams and Ferreira (2007) find that too much board monitoring could work counterproductive in well-governed firms and therefore could decrease shareholder value. These findings align with their research from 2009.
Ali et al. (2014) examine archival data to test the linear predictions between gender diversity on board of directors and firm performance. They researched Australian companies over the years 2011 and 2012. In their research they use two performance measures: return on assets and employee productivity. The test concerning the first performance measure, leads to an insignificant result. For the second performance measure, employee productivity, they find
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a significant positive relation between gender diversity and employee productivity. They find that employee productivity on average goes up $ 23,200 for every 5 percent increase in gender diversity on Blau’s Index (a gender diversity index).
Bear et al. (2010) research the impact of board diversity on firm reputation. They find that the presence of women on the board of directors leads to a significant rise in the
company’s Corporate Social Responsibility (CSR) ratings and hereby the reputation of the firm. These positive effects on CSR ratings and firm reputation could be accompanied by a positive effect on firm performance, as research by Russo and Fouts (1997) finds a positive relation between a pro-environmental reputation and return on assets and research by Donker et al. (2008) finds a positive relation between firm values that represent CSR and the
company’s market-to-book value. However the presence of just one female on the board could not be enough to make a difference, because minorities on the board of directors may find it more difficult to ventilate their opinions and are less likely to be heard (Bear et al, 2010).
2.3 Financial crisis
In the years 2008 and 2009 a financial crisis took place. This financial crisis was the biggest shock to US and worldwide financial systems since the 1930’s (Cornett et al., 2011).
Ryan and Haslam (2005) find a phenomenon that they call the ‘’ The glass cliff’’. This
phenomenon entails that women are more likely to be appointed to higher corporate positions, such as an appointment on the board of directors, in times of a financial downturn or a
downturn in the company’s performance. However studies solely find the existence of ‘’The glass cliff’’ , but have yet failed to determine why this phenomenon occurs.
2.4 This research
In summarization, the results of previous research on gender diverse boards are ambiguous. They show positive and negative results on firm performance for the presence of women on the board of directors.
Therefore in this study a more recent dataset (over the years 2007 through 2015) will be used to investigate what the effect of the presence of women on the board of directors is on firm performance measured in return on assets and return on equity. Since the effect of the
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financial crisis of 2008-2009 on the effect of women on the board of directors on firm performance has not been examined yet, it will also be tested if the effects of women on firm performance were different in this financial crisis.
3 Data
3.1 Data collection
All the data is gathered from Compustat. First the Net Income, Total Amount of Assets and Total Amount of Equity for North-American companies were retrieved through the
company’s financial statements. Because this research only focusses on large companies, only companies with a total of amount of assets of at least 1 billion dollars were included. For those companies the board composition was retrieved, which showed how many board members there were in a specific year and how many of them were female. After merging these two lists together, all the companies and years with missing values were removed. This led to the following dataset, containing 4.059 observations over a total of 646 unique
companies.
The variables Return on Assets and Return on Equity are for every company composed as Net Income divided by Total Amount of Assets and Net Income divided by Total Amount of Equity. On the average board of directors, in this sample, 15,28 percent of the board members is female. The average return on assets in one year is 5,80 percent and the average return on equity is 15,75 percent. The companies are divided over 9 industry sectors. The 3 largest sectors in this dataset are industrials, consumer discretionary and information technology with each sector containing about 17,3 percent of the total sample. The smallest sectors are telecommunications services and real estate, containing only 1,36 and 1,06 percent of the sample.
847 of the 4.059 observations, 20,87 percent, are from during the financial crisis of 2008-2009. Table 1, 2 and 3 show all the descriptive data.
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3.2 Descriptive data
Table 1
Variables
Variables Obs Mean Std. Dev. Min Max
Total Assets 4.059 18306,581 33419,151 305,0431 4026721 Net Income 4.059 1122,9581 2986,4951 -169981 452201 Shareholder Equity 4.059 7105,511 14382,31 -132441 1743991 Female percentage % 4.059 0,1528193 0,0960928 0 0,4666667 Computed Variables Return on Assets % 4.059 0,0579885 0,0865744 -2,283249 0,3710106 Return on Equity % 4.059 0,1575499 2,296281 -60,07692 70,38462 1 in Millions of Dollars Table 2 Sector Obs % Energy (ENE) 362 8,92 % Materials (MAT) 347 8,55 % Industrials (IND) 701 17,27 %
Consumer Discretionary (COD) 705 17,37 %
Consumer Staples (COS) 316 7,79 %
Health Care (HC) 480 11,83 %
Financials (FIN) 119 2,93 %
Information Technology (IT) 700 17,25 %
Telecommun. Services (TCS) 55 1,36 %
Utilities (UTI) 231 5,69 %
Real Estate (RE) 43 1,06 %
Total
4.059 100,00 %
Table 3
Year Obs %
2007 (no financial crisis) 316 7,79 % 2008 (financial crisis) 418 10,30 % 2009 (financial crisis) 429 10,57 % 2010 (no financial crisis) 448 11,04 % 2011 (no financial crisis) 472 11,63 % 2012 (no financial crisis) 488 12,02 % 2013 (no financial crisis) 507 12,49 % 2014 (no financial crisis) 526 12,96 % 2015 (no financial crisis) 455 11,21 %
Total
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4 Method
To test the hypotheses, that will be presented in the next sector, firm performance and the presence of women need to be quantified. This research uses two measures to measure the effect of women on the board, as recommended by Lumpkin and Dess (1996), stating that when investigating a variable on firm performance, it is best to use multiple measures for performance. The firm performance will be measured in return on equity and return on assets. The presence of women on the board of directors will be measured in a percentage of women on the board of directors. The measures for firm performance, return on assets and return on equity, are the same performance measures as used by Shrader et al. (1997), while return on assets is used in most of the research concerning this subject.
The Ordinary Least Squares regressions that will be used, are similar to the regressions used by Ahern and Dittmar (2012). The difference lies in the dependent variable, where the research of Ahern and Dittmar uses Tobin’s Q to measure firm performance.
The following Ordinary Least Squares regressions will be run. Regression 1: 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡= 𝛽0+ 𝛽1𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡+ 𝜃𝑠 + 𝜏𝑡+ 𝜀𝑖,𝑡 Regression 2: 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦𝑖,𝑡= 𝛽0+ 𝛽1𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡+ 𝜃𝑠 + 𝜏𝑡+ 𝜀𝑖,𝑡 Regression 3: 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡= 𝛽0+ 𝛽1𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡+ 𝛽2𝐶𝑟𝑖𝑠𝑖𝑠 + 𝛽3𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡∗ 𝐶𝑟𝑖𝑠𝑖𝑠 + 𝜃𝑠+ 𝜀𝑖,𝑡 Regression 4: 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦𝑖,𝑡= 𝛽0+ 𝛽1𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡+ 𝛽2𝐶𝑟𝑖𝑠𝑖𝑠 + 𝛽3𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡∗ 𝐶𝑟𝑖𝑠𝑖𝑠 + 𝜃𝑠+ 𝜀𝑖,𝑡
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In these regressions i indexes firms and t indexes time. 𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡 ,
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦𝑖,𝑡 and 𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡 are the Return on Assets, Return on Equity and Female percentage for firm i in year t. ‘𝛽0’ is the constant,‘𝜏𝑡’ are the time fixed effects for the years 2007 to 2015, ‘𝜃𝑠’ are sector fixed effects (a list of sectors is shown in table 2) and the error term is denoted as ‘𝜀𝑖,𝑡’. The sector fixed effects control for any observed or unobserved sector characteristics that are constant over time in a sector that may affect a firm’s return on assets or return on equity. The year fixed effects control for any further fluctuations of return on assets or return on equity (Ahern and Dittmar, 2012). ‘𝐶𝑟𝑖𝑠𝑖𝑠’ is a dummy variable with value ‘1’ if that year was in the financial crisis of 2008-2009, the years Cornett et al. (2010) describe as the financial crisis and value ‘0’ if otherwise. ‘𝛽2’ is the coefficient corresponding to this dummy variable.
The regressions are set up to give an answer to the hypotheses. If the coefficient ‘𝛽1’ in regression 1 and 2 corresponding to variable 𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡 is significant, this will give an answer to whether there is a correlation between the presence of women on the board of directors and firm performance. If the coefficient ‘𝛽3’ in regression 3 and 4 corresponding to variable 𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡∗ 𝐶𝑟𝑖𝑠𝑖𝑠 is significant, this will give an answer to whether there is a correlation between the presence of women on the board of directors and firm performance in a financial crisis.
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5 Hypotheses
The null hypothesis is:
The presence of women on the board of directors does not influence the firm performance. 𝐻0: 𝛽1= 0
The alternative hypothesis is:
The presence of women on the board of directors does influence the firm performance. 𝐻1: 𝛽1 ≠ 0
For the sub question, the hypotheses are:
Null hypothesis:
The presence of women on the board of directors does not influence the firm performance in a time of financial crisis.
𝐻0: 𝛽3= 0
Alternative hypothesis:
The presence of women on the board of directors does influence the firm performance in a time of financial crisis.
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6 Results
In this section the results of the regressions will be presented and the hypotheses will be evaluated using these results. All the results are visible in table 4, 5, 6, 7 and 8.
6.1 Main question
With only the use of year fixed effects, the coefficient 𝛽1is significant at a significance level of 10 percent and 5 percent, but not at a 1 percent significance level, with a p-value of 0.03. The value for the coefficient is .0309535, as shown in table 4, meaning that for a rise of 10 percent in the percentage of women on the board of directors, the return on assets for this firm rises with 0.309 percent. However when regression 1 is fully run, with the time and sector fixed effects as described in the previous section, the value of 𝛽1 turns out to be
non-significant, with a p-value of 0.281. This can be seen in table 5. This means that the positive result for the presence of women as found in table 3 does not exist anymore with the usage of sector fixed effects. This positive correlation that was found therefor can be accounted to the better performance of certain sectors, where the percentage of women on the board of
directors on average is higher, in comparison to the worse performing sectors.
Regression 2 does not show a significant correlation between the presence of women on the board of directors and firm performance, measured in return on equity, either. The p-value for this coefficient is 0.252.
6.2 Sub question
In regressions 3 and 4 the dummy variable 𝐶𝑟𝑖𝑠𝑖𝑠 and the new variable 𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡∗ 𝐶𝑟𝑖𝑠𝑖𝑠 are included. 𝛽1 is the coefficient for
𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡 in non-crisis years, 𝛽2 is the coefficient for the crisis and 𝛽3 is the coefficient for 𝐹𝑒𝑚𝑎𝑙𝑒 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒𝑖,𝑡 in crisis years. As shown in table 7 ,the value for 𝛽2 is -.0078581 and the value for 𝛽3 in regression 3 is -.0583629, however with a p-value of
respectively 0.192 and 0.102 they do not turn out to be significant.
Regression 4, where return on equity is used as the performance measure, results in an non-significant correlation between the presence of women on the board of directors and firm performance in the financial crisis of 2008-2009 with a p-value of 0.850. All the results of regression 4 can be seen in table 8.
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Table 4
ROA Coef. Std. Err. % female . 0309535* . 0142198 Year 2008 -. 0265024*** . 0142198 2009 -. 0212697** . 0064113 2010 -. 0025125 . 0063194 2011 -. 0010556 . 0062546 2012 -. 0058971 . 0062175 2013 -. 0033545 . 0061778 2014 -. 0114921 . 0061472 2015 -. 029294*** . 006334 2007 . 064538*** . 0051829 Number of obs = 4059 * p < 0.05, ** p < 0.01, *** p < 0.001
Table 5, Results of Regression 1 Table 6, Results of Regression 2
ROA Coef. Std. Err. ROE Coef. Std. Err.
% female . 0160672 . 0148879 % female . 4620509 . 4032945 Year Year 2008 -. 0263548*** . 0063236 2008 -. 0827854 . 1712976 2009 -. 0212454** . 0062901 2009 -. 0042778 . 1703912 2010 -. 0025936 . 0062338 2010 -. 0444426 . 168865 2011 -. 0012356 . 006171 2011 -. 1583088 . 167163 2012 -. 0062038 . 006136 2012 . 1504555 . 1662169 2013 -. 0035344 . 0060979 2013 -. 0598405 . 165184 2014 -. 0113735 . 0060682 2014 -. 0629199 . 1643791 2015 -. 0277658*** . 0062566 2015 -. 1616633 . 1694842 Sector Sector MAT . 0073806 . 0064302 MAT . 0727197 . 1741853 IND . 0267498*** . 0055105 IND . 2887379 . 1492722 COD . 0294268*** . 0056142 COD -. 0437665 . 1520816 COS . 0506525*** . 0067519 COS .012399 . 182899 HC . 0177223** . 0060184 HC . 0253277 . 1630315 FIN . 0276899** . 0089837 FIN -. 0363147 . 2433571 IT . 0244771*** . 0055216 IT . 0188166 . 149574 TCS -. 0127458 . 0123904 TCS . 0627226 . 3356397 UTI -. 0113055 . 0072602 UTI -. 0096865 . 196668 RE . 0043114 . 0138179 RE . 0208795 . 3743097 2007 ENE . 0460347*** . 006515 2007 ENE . 0650415 . 1764826 Number of obs = 4059 Number of obs = 4059
* p < 0.05, ** p < 0.01, *** p < 0.001 * p < 0.05, ** p < 0.01, *** p < 0.001
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Table 7, Results of Regression 3 Table 8, Results of Regression 4
ROA Coef. Std. Err. ROE Coef. Std. Err.
% female . 0169509 . 0163263 % female . 450596 . 4408488 Crisis -. 007786 . 0059391 Crisis . 0306924 . 1603696 % female *Crisis -. 0583629 . 0346002 % female *Crisis -. 1770813 . 9342891
Sector Sector MAT . 0087607 . 0064455 MAT . 0772742 . 1740429 IND . 0275286*** . 0055268 IND . 2917154 . 1492364 COD . 0312827*** . 0056253 COD -. 0345189 . 151897 COS . 0528565*** . 0067649 COS . 2113556 . 1826692 HC . 0191517** . 0060311 HC . 0298724 . 1628534 FIN . 0285105** . 0090114 FIN -. 0329671 . 2433282 IT . 0257912*** . 0055353 IT . 0247829 . 1494656 TCS -. 0107003 . 0124305 TCS . 0706953 . 3356532 UTI -. 0097776 . 0072788 UTI -. 0043733 . 1965448 RE . 0041954 . 0138608 RE . 0186526 . 3742759 ENE . 0367791*** . 0048962 ENE . 0122364 . 13221 Number of obs = 4059 Number of obs = 4059
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7 Conclusion
Because the results of the two regressions concerning the main hypothesis : ‘’The presence of women on the board of directors does not influence the firm performance.’’ turn out to be not-significant, no evidence is found that the presence of women on the board of directors has a correlation, positive or negative, with firm performance, measured in return on assets and return on equity. The findings of this research do not align with the findings of Ahern and Dittmar (2012), who find a significant negative effect for a higher percentage of women on the board of directors on firm performance. However they find this effect after a law change, obligating the firms to rise the amount of women on the board of directors. This effect could be due to the obligated change of the boards, rather than solely the rise of women on the board of directors, as a such a big change in board composition is likely to have a negative influence on firm performance. This is also supported by the theory that firms choose their board of directors to increase firm value (Ahern and Dittmar, 2012). Ali et al. (2014), as well as this research, find a non-significant correlation between the presence of women on the board of directors and the firm performance. A reason Ali et al. (2014) give for this non-significant result is that the resources provided by gender diversity could take time before they have an impact on the accounting measures return on assets and return on equity.
Regression 3 and 4, the regressions concerning the sub question: ‘’The presence of women on the board of directors does not influence the firm performance in a time of
financial crisis.’’ are found to be non-significant as well. Hence, no evidence is found that the presence of women on the board of directors has a correlation with firm performance in the financial crisis of 2008-2009.
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8 Discussion
This research does not show any statistical evidence for a correlation between the presence of women on the board of directors and firm performance. No evidence for a correlation between firm performance and the presence of women on the board of directors in times of a financial crisis is found either. However there are some limitations to this research. One limitation is the probability of ‘’omitted variable bias’’. If the estimates 𝛽1 and 𝛽3 were found to be significant, only a correlation between the presence of women on the board and firm performance would have been established, but not a causal effect. For example, it could be possible that a certain variable that could have driven the percentage change for women on the board of directors, is also the driver for the change in firm performance. Because we do not observe that variable, this is a case of omitted variable bias (Stock and Watson, 2015). In this research the presence of women is measured as a percentage of women on the board of directors and not in absolute numbers. Another limitation is that this research was performed only on North-American companies. Results may be different when companies from all over the world are investigated. For further research it could be interesting to investigate firms from all over the world and also use absolute numbers for women on the board of directors.
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9 Bibliography
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Valuation of Mandated Female Board Representation, Quarterly Journal of Economics 127, pp. 137-197
Ali, M., NG, Y.L., Kulik, C.T., 2014, Board Age and Gender Diversity: A Test of Competing Linear and Curvilinear Predictions, Journal of Business Ethics 125, pp. 497-512 Bear, Stephen, Rahman, Noushi, Post, Corinne, 2010, The Impact of Board Diversity and
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