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Top management gender diversity and performance: in search of threshold effects

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  • Yundan Gong
  • Sourafel Girma

Abstract

The impact of gender diversity on business performance has been featured prominently on the agenda of many politicians and business leaders in recent years. However, empirical results of the impact of gender diversity on firm performance have been ambiguous. This paper contributes to the literature by using propensity score-based estimation techniques on a large sample of UK firms to analyse the performance effect of appointing a first female board director. We look at financial and non-financial performance indicators and document significant effects on firm growth and labour cost efficiency, but rather fragile ones on accounting returns, such as profitability. We also document evidence of another threshold effect; namely, gender diversity appears to have its highest impact (its ‘ceiling’) when the proportion of female directors is approximately 30%. Carrying out a sensitivity analysis, we conclude that hidden bias must be implausibly high to be able to attribute the beneficial effects of boardroom gender diversity to unmeasured confounding.

Suggested Citation

  • Yundan Gong & Sourafel Girma, 2021. "Top management gender diversity and performance: in search of threshold effects," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 45(1), pages 109-127.
    • Handle: RePEc:oup:cambje:v:45:y:2021:i:1:p:109-127.
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    File URL: http://hdl.handle.net/10.1093/cje/beaa045
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    Cited by:

    1. Victoria Bogdan & Dorina-Nicoleta Popa & Mărioara Beleneşi & Luminița Rus & Carmen-Mihaela Scorțe, 2023. "Gender Diversity and Business Performance Nexus: A Synoptic Panorama Based on Bibliometric Network Analysis," Sustainability, MDPI, vol. 15(3), pages 1-26, January.
    2. Anicia Jaegler, 2022. "How to Measure Inclusion in Higher Education: An Inclusive Rating," Sustainability, MDPI, vol. 14(14), pages 1-11, July.

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