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Does board gender diversity affect firm risk-taking? Evidence from the French stock market

Abstract

Drawing from a sample of French companies that made up the SBF 120 index over the period 2006–2010 (before the enactment of the Copé–Zimmermann law on gender quotas on boards), this paper investigates the relationship between board gender diversity and firm risk-taking (measured by the variability of the return on assets). Using a generalized method of moments estimation, no evidence is found to support the assumption of a significant relationship between women on corporate boards and firm risk-taking. These results potentially can be relevant for policy makers and academic research.

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Notes

  1. 1.

    Jianakoplos and Bernasek (1998) underline that “as wealth increases, the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men. [Nevertheless], gender differences in financial risk taking are also influenced by age, race and number of children” (p. 620). According to these authors, greater financial risk aversion could partially explain US women's lower levels of wealth compared with men.

  2. 2.

    Perryman et al. (2016) underline that female executives are paid less than male executives, even at the TMT level. Nevertheless, when gender diversity increases, the salary differences between genders decrease.

  3. 3.

    SBF stands for the Société des bourses françaises.

  4. 4.

    Following various financial scandals (e.g. Vivendi Universal), the AFEP and MEDEF (the French Employers’ Association) requested a re-examination in 2002 of French corporate governance principles. The Bouton Report of the same year contained stricter recommendations, regarding, in particular, board independence.

  5. 5.

    According to the figures supplied by CEDEF (Centre de Documentation Économie-Finances), which is attached to the French Ministry for the Economy and Finance.

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Bruna, M.G., Dang, R., Scotto, MJ. et al. Does board gender diversity affect firm risk-taking? Evidence from the French stock market. J Manag Gov 23, 915–938 (2019). https://doi.org/10.1007/s10997-019-09473-1

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Keywords

  • Women on corporate boards
  • Risk-taking
  • Gender diversity
  • Endogeneity