Skip to main content
Log in

Do female directors will have impact on corporate performance?

Review of Managerial Science Aims and scope Submit manuscript

Abstract

The purpose of this study is to explore the influence of female directors on the corporate performance of Chinese banks and Taiwanese financial holding companies. The sample consists of 14 Chinese banks and 15 Taiwanese financial holding companies in 2010–2014. The empirical results show that the proportion of non-executive female directors and independent female directors have significant positive influence on corporate performance. The result shows that the higher the proportion of female directors is, the better off the corporate performance would be. There is robust evidence in the data to conclude that female directors in specific posts can influence a firm’s corporate performance.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

References

  • Abor J, Biekpe N (2007) Corporate governance, ownership structure and performance of SMEs in Ghana: implications for financing opportunities. Corp Gov Int J Bus Soc 7:288–300

    Google Scholar 

  • Adams RB, Ferreira D (2007) A theory of friendly boards. J Financ 62:217–250

    Google Scholar 

  • Adams RB, Ferreira D (2009) Women in the boardroom and their impact on governance and performance. J Financ Econ 94:291–309

    Google Scholar 

  • Adams RB, Funk P (2012) Beyond the glass ceiling: Does gender matter? Manag Sci 58:219–235

    Google Scholar 

  • Adams RB, de Haan J, Terjesen S, van Ees H (2015) Board diversity: moving the field forward. Corp Gov Int Rev 23:77–82

    Google Scholar 

  • Anderson RC, Reeb DM, Upadhyay A, Zhao W (2011) The economics of director heterogeneity. Financ Manag 40:5–38

    Google Scholar 

  • Banker RD, Natarajan R (2008) Evaluating contextual variables affecting productivity using data envelopment analysis. Oper Res 56:48–58

    Google Scholar 

  • Ben-Amar W, Francoeur C, Hafsi T, Labelle R (2013) What makes better boards? A closer look at diversity and ownership. Br J Manag 24:85–101

    Google Scholar 

  • Bender KA, Donohue SM, Heywood JS (2005) Job satisfaction and gender segregation. Oxf Econ Pap 57:479–496

    Google Scholar 

  • Campbell K, Mínguez-Vera A (2008) Gender diversity in the boardroom and firm financial performance. J Bus Eth 83:435–451

    Google Scholar 

  • Carter DA, Simkins BJ, Simpson WG (2003) Corporate governance, board diversity, and firm value. Financ Rev 38(1):33–53

    Google Scholar 

  • Catalyst (2004) The bottom line: connecting corporate performance and gender diversity. Catalyst, New York

    Google Scholar 

  • Catalyst A (2013) Custody and education: arbitrary detention for female sex workers in China. Asia Catalyst, New York City

    Google Scholar 

  • Chauhan Y, Dey DK (2017) Do female directors really add value in Indian firms? J Multinatl Financ Manag 42:24–36

    Google Scholar 

  • Chen CJ, Jaggi B (2001) Association between independent non-executive directors, family control and financial disclosures in Hong Kong. J Account Pub Policy 19:285–310

    Google Scholar 

  • Cheng S (2008) Board size and the variability of corporate performance. J Financ Econ 87:157–176

    Google Scholar 

  • Chou H-I, Chung H, Yin X (2013) Attendance of board meetings and company performance: evidence from Taiwan. J Bank Financ 37:4157–4171

    Google Scholar 

  • Clark AE (1997) Job satisfaction and gender: why are women so happy at work? Labour economics 4:341–372

    Google Scholar 

  • Daily CM, Dalton DR (2003) Women in the boardroom: a business imperative. J Bus Strategy 24(5):8–9

    Google Scholar 

  • Dang R, Bender A-F, Scotto M-J (2014) Women on French corporate board of directors: how do they differ from their male counterparts? J Appl Bus Res 30:489

    Google Scholar 

  • Darmadi S (2013) Do women in top management affect firm performance? Evid Indones Corp Gov Int J Bus Soc 13:288–304

    Google Scholar 

  • De Cabo R, Gimeno R, Nieto M (2009) Gender diversity on European banks’ board of directors: traces of discrimination. Universidad CEU San Pablo and CUNEF, San Pablo

    Google Scholar 

  • Eckel CC, Füllbrunn SC (2017) Hidden vs. known gender effects in experimental asset markets. Econ Lett 156:7–9

    Google Scholar 

  • Erhardt NL, Werbel JD, Shrader CB (2003) Board of director diversity and firm financial performance. Corp Gov Int Rev 11:102–111

    Google Scholar 

  • Erkut S, Kramer VW, Konrad AM (2008) Critical mass: does the number of women on a corporate board make a difference? In: Women on corporate boards of directors: international research and practice. Edward Elgar Publishing Limited, Cheltenham

    Google Scholar 

  • Faccio M, Marchica M-T, Mura R (2016) CEO gender, corporate risk-taking, and the efficiency of capital allocation. J Corp Finance 39:193–209

    Google Scholar 

  • Farrell KA, Hersch PL (2005) Additions to corporate boards: the effect of gender. J Corp Finance 11:85–106

    Google Scholar 

  • Ferreira D (2015) Board diversity: should we trust research to inform policy? Corp Gov Int Rev 23:108–111

    Google Scholar 

  • Gavious I, Segev E, Yosef R (2012) Female directors and earnings management in high-technology firms. Pac Account Rev 24:4–32

    Google Scholar 

  • Golany B, Roll Y (1989) An application procedure for DEA. Omega 17:237–250

    Google Scholar 

  • González M, Guzmán A, Pablo E, Trujillo MA (2017) Does gender really matter in the boardroom? Evidence from closely held family firms. Rev Manag Sci. https://doi.org/10.1007/s11846-018-0292-1

    Book  Google Scholar 

  • Gulamhussen MA, Santa SF (2015) Female directors in bank boardrooms and their influence on performance and risk-taking. Glob Finance J 28:10–23

    Google Scholar 

  • Hafeez K, Malak N, Abdelmeguid H (2006) A framework for TQM to achieve business excellence. Total Qual Manag Bus Excell 17:1213–1229

    Google Scholar 

  • Haslam SA, Ryan MK, Kulich C, Trojanowski G, Atkins C (2010) Investing with prejudice: the relationship between women’s presence on company boards and objective and subjective measures of company performance. Br J Manag 21:484–497

    Google Scholar 

  • Heidrick T, Struggles H (2011) Challenging board performance-European report on corporate governance. Heidrick and Struggles, International Inc, Chicago

    Google Scholar 

  • Heminway JM (2007) Sex, trust, and corporate boards. Hastings Women’s LJ 18:173–185

    Google Scholar 

  • Hillman AJ, Shropshire C, Cannella AA Jr (2007) Organizational predictors of women on corporate boards. Acad Manag J 50:941–952

    Google Scholar 

  • Hoel M (2008) The quota story: five years of change in Norway. In: International research and practice. Edward Elgar Publishing Limited, Cheltenham

    Google Scholar 

  • Khan WA, Vieito JP (2013) CEO gender and firm performance. J Econ Bus 67:55–66

    Google Scholar 

  • Kim D, Starks LT (2016) Gender diversity on corporate boards: do women contribute unique skills? Am Econ Rev 106:267–271

    Google Scholar 

  • Kochan T, Bezrukova K, Ely R, Jackson S, Joshi A, Jehn K, Leonard J, Levine D, Thomas D (2003) The effects of diversity on business performance: report of the diversity research network. Hum Resour Manag 42(1):3–21

    Google Scholar 

  • Kravitz DA (2003) More women in the workplace: is there a payoff in firm performance? Acad Manag Exec 17:148–149

    Google Scholar 

  • Kravitz HM, Ganz PA, Bromberger J, Powell LH, Sutton-Tyrrell K, Meyer PM (2003) Sleep difficulty in women at midlife: a community survey of sleep and the menopausal transition. Menopause 10:19–28

    Google Scholar 

  • Krishnan GV, Parsons LM (2008) Getting to the bottom line: an exploration of gender and earnings quality. J Bus Eth 78:65–76

    Google Scholar 

  • Lam KC, McGuinness PB, Vieito JP (2013) CEO gender, executive compensation and firm performance in Chinese-listed enterprises. Pac Basin Finance J 21:1136–1159

    Google Scholar 

  • Liu Y, Wei Z, Xie F (2014) Do women directors improve firm performance in China? J Corp Finance 28:169–184

    Google Scholar 

  • López-Delgado P, Diéguez-Soto J (2018) Indebtedness in family-managed firms: the moderating role of female directors on the board. Rev Manag Sci. https://doi.org/10.1007/s11846-018-0307-y

    Article  Google Scholar 

  • Lu WM, Kweh QL, He DS, Shih JM (2017) Performance analysis of the cultural and creative industry: a network-based approach. Naval Res Logist (NRL) 64:662–676

    Google Scholar 

  • Mathisen GE, Ogaard T, Marnburg E (2013) Women in the boardroom: how do female directors of corporate boards perceive boardroom dynamics? J Bus Ethics 116:87–97

    Google Scholar 

  • Nguyen BD, Nielsen KM (2010) The value of independent directors: evidence from sudden deaths. J Financ Econ 98:550–567

    Google Scholar 

  • Niederle M, Vesterlund L (2007) Do women shy away from competition? do men compete too much? Q J Econ 122:1067–1101

    Google Scholar 

  • Nielsen S, Huse M (2010) The contribution of women on boards of directors: going beyond the surface. Corp Gov Int Rev 18:136–148

    Google Scholar 

  • O’brien RM (2007) A caution regarding rules of thumb for variance inflation factors. Qual Quant 41:673–690

    Google Scholar 

  • Olson PD, Zuiker VS, Danes SM, Stafford K, Heck RK, Duncan KA (2003) The impact of the family and the business on family business sustainability. J Bus Ventur 18:639–666

    Google Scholar 

  • Penman SH (2007) Financial reporting quality: Is fair value a plus or a minus? Account Bus Res 37:33–44. https://doi.org/10.1080/00014788.2007.9730083

    Article  Google Scholar 

  • Perry-Richardson JJ, Schofield CW, Ford NB (1990) Courtship of the garter snake, Thamnophis marcianus, with a description of a female behavior for coitus interruption. J Herpetol 24:76–78

    Google Scholar 

  • Robinson G, Dechant K (1997) Building a business case for diversity. Acad Manag Perspect 11:21–31

    Google Scholar 

  • Selvaraj PC (2015) The effects of work Force diversity on employee performance in Singapore organisations. Int J Bus Adm 6:17

    Google Scholar 

  • Simar L, Wilson PW (2011) Two-stage DEA: caveat emptor. J Prod Anal 36:205

    Google Scholar 

  • Singh V, Terjesen S, Vinnicombe S (2008) Newly appointed directors in the boardroom: how do women and men differ? Eur Manag J 26:48–58

    Google Scholar 

  • Tate G, Yang L (2015) Female leadership and gender equity: evidence from plant closure. J Financ Econ 117:77–97

    Google Scholar 

  • Terjesen S, Couto EB, Francisco PM (2016) Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity. J Manag Gov 20:447–483

    Google Scholar 

  • Ting IWK, Lean HH (2011) Capital structure of government-linked companies in Malaysia. Asian Acad Manag J Account Finance 7(2):137–156

    Google Scholar 

  • Ting IWK, Lean HH, Kweh QL, Azizan NA (2016) Managerial overconfidence, government intervention and corporate financing decision. Int J Manag Finance 12:4–24

    Google Scholar 

  • Tone K, Tsutsui M (2010) Dynamic DEA: a slacks-based measure approach. Omega 38:145–156

    Google Scholar 

  • Triana MdC, Miller TL, Trzebiatowski TM (2013) The double-edged nature of board gender diversity: diversity, firm performance, and the power of women directors as predictors of strategic change. Organ Sci 25:609–632

    Google Scholar 

  • Wang W-K, Lin F, Ting IWK, Kweh QL, Lu W-M, Chiu T-Y (2017) Does asset-light strategy contribute to the dynamic efficiency of global airlines? J Air Transp Manag 62:99–108

    Google Scholar 

  • Wearing CA, Wearing B (2004) Between glass ceilings: female non-executive directors in UK quoted companies. Int J Discl Gov 1:355–371

    Google Scholar 

  • Wiersema MF, Bantel KA (1992) Top management team demography and corporate strategic change. Acad Manag J 35:91–121

    Google Scholar 

  • Young S (2000) The increasing use of non-executive directors: its impact on UK board structure and governance arrangements. J Bus Finance Account 27:1311–1342

    Google Scholar 

  • Zelechowski DD, Bilimoria D (2004) Characteristics of women and men corporate inside directors in the US. Corp Gov Int Rev 12:337–342

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Wen-Min Lu.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix I

Appendix I

1.1 Epsilon-based measure of efficiency in DEA model approach

Epsilon-based measure of efficiency in DEA model is illustrated as follow.

Step 1 We used SBM model for finding slacks and projected DMUs to efficient frontiers. They are all projected to the unique efficient DMU. Throughout this paper, we deal with n DMUs \(\left( {j = 1, \ldots ,n} \right)\) having m inputs \(\left( {i = 1, \ldots ,m} \right)\) and s outputs \(\left( {r = 1, \ldots ,s} \right)\). The input and output matrices are denoted by \(X = \left\{ {x_{ij} } \right\} \in R^{mxn}\) and \(Y = \left\{ {y_{ij} } \right\} \in R^{sxn}\) respectively. We assume X > 0 and Y > 0.SBM

$$\hbox{min} \frac{{1 - \frac{1}{m}\sum\nolimits_{i = 1}^{m} {\frac{{s_{i}^{ - } }}{{x_{io} }}} }}{{1 - \frac{1}{s}\sum\nolimits_{r = 1}^{m} {\frac{{s_{r}^{ + } }}{{y_{ro} }}} }}$$
$$\begin{array}{*{20}l} {Subject\;to} \hfill & {} \hfill \\ {x_{io} = \sum {_{j = 1}^{n} x_{ij} \lambda_{j} + s_{j}^{ - } = 0} } \hfill & {i = 1, \ldots ,m.} \hfill \\ {y_{ro} = \sum {_{j = 1}^{n} y_{rj} \lambda_{j} - s_{r}^{ + } = 0} } \hfill & {i = 1, \ldots ,s.} \hfill \\ {\sum {_{j = 1}^{n} } \lambda_{j} = 1} \hfill & {} \hfill \\ {\lambda_{j} (\forall j),s_{i}^{ - } \ge 0(\forall i),s_{r}^{ + } \ge (\forall r).} \hfill & {} \hfill \\ \end{array}$$
(5)

Using the optimal slacks \(s^{ - *}\) and \(s^{ + *}\) we define the projected input and output for DMUo by

$$\begin{array}{*{20}l} {\overline{{X_{io} }} = x_{io} - s_{i}^{ - *} (i = 1, \ldots ,m)} \hfill \\ {\overline{{Y_{ro} }} = y_{ro} + s_{r}^{ + *} (r = 1, \ldots ,s)} \hfill \\ \end{array}$$
(6)

We notice that SBM model may produce different projections but they are on the efficient frontiers of the production possibility set. Thus, we have n VRS-efficient DMUs denoted by

$$\left[ {\begin{array}{*{20}c} {\overline{X} } \\ {\overline{Y} } \\ \end{array} } \right] = \left[ {\begin{array}{*{20}c} {\bar{X}_{11} } & \cdots & {\bar{X}_{1} } \\ {} & \cdots & {} \\ {\bar{X}_{m1} } & \cdots & {\bar{X}_{mn} } \\ {\bar{Y}_{11} } & \cdots & {\bar{Y}_{1n} } \\ {} & \cdots & {} \\ {\bar{Y}_{s1} } & \cdots & {\bar{Y}_{sn} } \\ \end{array} } \right] = \left[ \begin{aligned} \bar{X}_{1} \hfill \\ \cdots \hfill \\ \bar{X}_{m} \hfill \\ \bar{Y}_{1} \hfill \\ \cdots \hfill \\ \bar{Y}_{s} \hfill \\ \end{aligned} \right]$$
(7)

All CRS (constant-returns-to-scale) efficient DMUs are included in this set along with VRS-efficient DMUs.

Step 2 We calculated the diversity matrix by the formula (8)

Definition 1

(Diversity index). We define the “diversity index” of vectors a and b as the deviation of \(\left\{ {c_{j} } \right\}\) from the average \(\bar{c}\) in the following way:

$$\begin{aligned} D\left( {a,b} \right) & = \frac{{\mathop \sum \nolimits_{j = 1}^{n} \left| {c_{j} - \bar{c}} \right|}}{{n\left( {c_{max} - c_{min} } \right)}},\;(if\;c_{max} > c_{min} ) \\ & = 0 \, (ifc_{\hbox{max} } > c_{\hbox{min} } ) \\ \end{aligned}$$
(8)

Step 3 The affinity matrix is calculated by the formula (9).

In the input-oriented case, we calculate the affinity matrix \(s = \left[ {s_{ij} } \right] \in R^{m*n}\) with the elements

$$s_{ij} = s\left( {\overline{{x_{i} }} ,\overline{{x_{j} }} } \right)\left( {i,j = 1, \ldots ,m} \right)$$
(9)

All elements of the matrix S satisfy the bounds: \(1 \ge s_{ij} \ge 0\left( {\forall \left( {ij} \right)} \right)\)

Step 4 The largest eigenvalue and eigenvector of the affinity matrix are calculated.

We define \(\varepsilon_{x}\) and \(w^{ - }\) in the EBM as follows:

$$\begin{aligned} \varepsilon_{x} & = \frac{{m - \rho_{x} }}{m - 1}\;\left( {if\;m > 1} \right) \\ & = 0\left( {if\;m = 1} \right) \\ w^{ - } & = \frac{{w_{x} }}{{\sum\nolimits_{i = 1}^{m} {w_{xi} } }} \\ \end{aligned}$$
(10)

The thus defined \(\varepsilon_{x}\) and \(w^{ - }\) satisfy the relationship \(0 \le \varepsilon_{x} \le 1\) and \(ew^{ - } = 1\)

Step 5 Use of \(\varepsilon_{x}\) and \(w^{ - }\) in the EBM of efficiency.

[EBM-I–V]

$$r^{*} = \mathop {\hbox{min} }\limits_{\theta ,\lambda ,s} \theta - \varepsilon_{x} \sum\limits_{i = 1}^{m} {\frac{{w_{i}^{ - } s_{i}^{ - } }}{{x_{io} }}}$$
(11)
$$\begin{array}{*{20}l} {Subject\;to} \hfill & {} \hfill \\ {\theta x_{io} - \sum\limits_{j = 1}^{n} {x_{ij} \lambda_{j} - s_{i}^{ - } } = 0} \hfill & {i = 1, \ldots ,m.} \hfill \\ {\mathop \sum \limits_{j = 1}^{n} y_{rj} \lambda_{j} \ge y_{r0} } \hfill & {r = 1, \ldots ,s.} \hfill \\ {\mathop \sum \limits_{j = 1}^{n} \lambda_{j} = 1} \hfill & {} \hfill \\ {\lambda_{j} \ge 0} \hfill & {} \hfill \\ {s_{i}^{ - } \ge 0} \hfill & {} \hfill \\ \end{array}$$
(12)

where \(w_{i}^{ - }\) is the weight (relative importance) of input \({\text{i}}\) and satisfies \(\sum\nolimits_{i = 1}^{m} {w_{i}^{ - } } = 1(w_{i}^{ - } \ge 0\forall i)\) and \(\varepsilon_{x}\) is a key parameter which combines the radial \(\theta\) from BCC model and the non-radial slacks term. Parameters \(\varepsilon_{x}\) and \(w^{ - } = (w_{1}^{ - } , \ldots ,w_{m}^{ - } )\) must be supplied prior to the efficiency measurements. As can be seen from the term \(\frac{{w_{i}^{ - } s_{i}^{ - } }}{{x_{io} }}\) in the objective function (5) of, \(\frac{{s_{i}^{ - } }}{{x_{io} }}\) is units-invariant and so \(w_{i}^{ - }\) should be a units-invariant value reflecting the relative importance of resource “i”.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Ting, I.W.K., Wang, WK., Lu, WM. et al. Do female directors will have impact on corporate performance?. Rev Manag Sci 15, 611–631 (2021). https://doi.org/10.1007/s11846-019-00351-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11846-019-00351-6

Keywords

Mathematics Subject Classification

Navigation