We investigated if having a higher proportion of female directors on the boards of the 100 largest UK-listed companies has had any effect on their financial performance.
Using data for FTSE 100 firms for the period 2003-2013, we found that firms which showed greater gender diversity are more profitable and that those with women on their board also enjoyed higher market valuations.
However, consistent with prior research, no reliable relationship was found between gender diversity on boards and stock returns.
- Funded by March Gestión, Spain (a European investment company).
Impact of our research
We are the first to provide empirical evidence of the impact of gender diversity on corporate boards on the firm’s financial performance.
We investigated one of the key facets of good corporate governance – the board’s gender diversity – and its influence on the shareholder value creation. This offered insights to policymakers interested in enhancing the gender diversity of the UK’s boards and also highlighted that greater gender diversity is indeed an important determinant of the performance of firms.
Why the research was commissioned
The investment industry is constantly looking for different ways to identify valuable companies. This research was commissioned by one of the largest European investment companies, March Gestión (Spain), who were interested in exploring the possibility of launching a new investment fund based on good governance.
Gender diversity on corporate boards is one of the most hotly-debated issues and has taken centre stage in the broader corporate governance debate. Firms with good corporate governance are likely to outperform their peers and the aim was to empirically investigate whether this is true.
We have world-leading faculty who are engaged in cutting-edge finance research that is valued by both the financial services industry and policymakers.
The University is well known for leading research on women on boards and is also regarded as a leader for its value-relevant research for improving management practice.
Largely desk-based research which utilised high-quality databases such as Bloomberg.