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

Author

Listed:
  • Smith, Nina
  • Smith, Valdemar
  • Verner, Mette
Abstract
Purpose: This study examines the relationship between management diversity and firm performance in the case of women in top executive jobs and on boards of directors. Corporate governance literature argues that board diversity is potentially positively related to firm performance. This hypothesis is tested in the paper. Methodology: By the use of data for the 2500 largest Danish firms observed during the period 1993–2001 various statistical models for firm performance are specified and estimated. The main focus in the models is the estimated relationship between the proportion of women in top management (CEO’s and on boards of directors) and firm performance. Findings: The results show 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 strongly depend on the qualifications of female top managers. Originality: This paper provides solid statistical evidence of the effects of women in top management on firm performance. The use of a large sample and the panel nature of the data set make it possible to properly control for direction of causality and, furthermore, numerous firm and individual information are included to estimate genuine effects of women in top management.

Suggested Citation

  • Smith, Nina & Smith, Valdemar & Verner, Mette, 2006. "Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms," MPRA Paper 78715, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:78715
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    References listed on IDEAS

    as
    1. Du Rietz, Anita & Henrekson, Magnus, 2000. "Testing the Female Underperformance Hypothesis," Small Business Economics, Springer, vol. 14(1), pages 1-10, February.
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    3. David A. Carter & Betty J. Simkins & W. Gary Simpson, 2003. "Corporate Governance, Board Diversity, and Firm Value," The Financial Review, Eastern Finance Association, vol. 38(1), pages 33-53, February.
    4. Morten Bennedsen & Kasper Nielsen & Francisco Pérez-González & Daniel Wolfenzon, 2005. "Inside the Family Firm: The Role of Families in Succession Decisions and Performance," CIE Discussion Papers 2005-13, University of Copenhagen. Department of Economics. Centre for Industrial Economics, revised Sep 2005.
    5. Bennedsen, Morten & Nielsen, Kasper & Pérez-González, Francisco & Wolfenzon, Daniel, 2005. "Inside the Family Firm," Working Papers 21-2005, Copenhagen Business School, Department of Economics.
    6. Bell, Linda A., 2005. "Women-Led Firms and the Gender Gap in Top Executive Jobs," IZA Discussion Papers 1689, Institute of Labor Economics (IZA).
    7. Karen A. Bantel & Susan E. Jackson, 1989. "Top management and innovations in banking: Does the composition of the top team make a difference?," Strategic Management Journal, Wiley Blackwell, vol. 10(S1), pages 107-124, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Firm performance; female CEOs; management diversity; gender diversity;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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