Does Board Gender Diversity Have a Financial Impact? Evidence Using Stock Portfolio Performance


There is growing regulatory pressure on firms worldwide to address the under-representation of women in senior positions. Regulators have taken a variety of approaches to the issue. We investigate a jurisdiction that has issued recommendations and disclosure requirements, rather than implementing quotas. Much of the rhetoric surrounding gender diversity centres on whether diversity has a financial impact. In this paper we take an aggregate (market-level) approach and compare the performance of portfolios of firms with gender diverse boards to those without. We also investigate whether having multiple women on the board is linked to performance, and if there is a within-industry effect. Overall, we do not find evidence of an association between diversity and performance. We find some weak evidence of a negative correlation between having multiple women on the board and performance, but that in some industries diversity is positively correlated with performance.

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Fig. 1


  1. 1.

    Australian Securities Exchange (2010), Corporate Governance Principles and Recommendations with 2010 amendments. Available at Accessed 16 November 2012.

  2. 2.

    Ibid; Financial Reporting Council (2012), The UK Corporate Governance Code. Available at Accessed 19 November 2012.

  3. 3.

    Australian Human Rights Commission (2010) Gender Equality Blueprint 2010. Available at Accessed 16 November 2012.

  4. 4.

    The AICD reports that in 2007 and 2008, the new appointments to boards who were female comprised 8% of appointments. In 2009, 5%, 2010, 25%, 2011, 28% and in 2012 it was 24%. The sample population reported by the AICD comprises the S&P/ASX 200 (top 200 listed Australian companies). Our sample comprises the S&P/ASX 300 (see Accessed 14 March 2013).

  5. 5.

    Australian Securities Exchange (2010), op cit.

  6. 6. Accessed 19 November 2012.

  7. 7.

    Although the studies are recent, the datasets are from the prior decade.

  8. 8.

    Note both of these studies measure diversity as gender and ethnicity.

  9. 9.

    The authors define ROE as the ratio of profit after interest and tax to book value of equity, whereas shareholder return is the ASX realised rate of return adjusted for dividends and splits.

  10. 10. Accessed 13 December 2012.

  11. 11. Accessed 12 June 2012.

  12. 12.

    Panel A of Table 2 clearly demonstrates that it is not possible to disaggregate further on the number of women, since the vast majority of boards have only one or two women.

  13. 13.

    Note that Brammer et al. (2007) study is based on a UK sample.

  14. 14.

    For robustness we also investigate the period prior to the ASX recommendations. As discussions about this recommendation were already occurring in early 2009, we investigate the sample prior to 2008. We rerun all regressions using the sample period January 2004 to December 2008. Results (not displayed, available upon request) are qualitatively identical. Alphas on the long/short portfolios are insignificant and firms that have women on their boards are larger, value firms but do not load onto momentum.

  15. 15.

    We rerun the analysis using the period January 2004 to December 2008. Alphas on the long/short portfolios are uniformly insignificant. We do not find the size effect in the value-weighted long/short portfolio but still find a significant value effect.

  16. 16.

    Other results available upon request.

  17. 17.

    The alphas on the long/short consumer goods portfolios are significantly positive across all models although the alpha on basic materials is not significant in other specifications. The equally weighted alphas on consumer services (telecommunications) are significantly negative (positive) across the equally weighted portfolios. However, given that this result is not upheld in the value-weighted models, this may be attributable to some poorly (over-) performing small firms in that sector.

  18. 18.

    Coefficients on the size factors are similarly predominantly negative on the equally weighted portfolios.

  19. 19.

    Results for the January 2004 to December 2008 are similar with most industries having insignificant alphas on the long/short portfolios. However, we do find outperformance in financials and healthcare and underperformance in industrials. Coefficients on SMB are negative in the majority of the cases.

  20. 20.

    Both the all-male and the female consumer goods portfolios have a minimum of four firms in a particular month.

  21. 21.

    We thank an anonymous referee for this suggestion.

  22. 22.

    Adams et al. (2011) use government data from the Equal Opportunity for Women in the Workplace Agency to predict that high participation rates in the workforce may affect diversity, so that finance has a high workplace participation, whereas the natural resources sector is male-dominated.


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The authors thank John Nowland, Emma Schultz, Tom Smith, Garry Twite and workshop participants at the Australian National University for helpful comments. We also thank Chen Cheng and Theingi Oo for research assistance. We thank Susan McCreery for proofreading the manuscript. We acknowledge the Accounting and Finance Association of Australia and New Zealand for financial support.

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Correspondence to Jacquelyn E. Humphrey.

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Chapple, L., Humphrey, J.E. Does Board Gender Diversity Have a Financial Impact? Evidence Using Stock Portfolio Performance. J Bus Ethics 122, 709–723 (2014).

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  • Gender diversity
  • Corporate governance
  • Financial performance