A selection of interesting articles we found recently about women in managerial positions and the effect on company performance.

Managerial gender diversity and firm performance: Moderation may be best
This study examines the relationship between managerial gender diversity (MGD) and firm performance. It outlines how extremely low and extremely high levels of MGD can trigger group processes that can impede the attainment of the performance benefits associated with moderate levels of MGD. Findings from longitudinal panel data from financial service firms in Portugal suggest that the effects of MGD on firm performance are best captured by a non-linear function with two breaking points.

This study introduces a framework that combines different theoretical perspectives focused on tokenism, subgroup formation, divergent thinking, and other group processes linked to positive and negative gender-diversity consequences. Corresponding overall firm-performance outcomes are contingent upon the level of MGD.

Read more in: Andreas Schwab, James D. Werbel, Heike Hofmann & Paulo L. Henriques. 2016. Managerial Gender Diversity and Firm Performance: An Integration of Different Theoretical Perspectives.
Group Organization Management, 41(1), 5-31.


Are female bank CEOs and chairs more conservative and risk averse?
This paper, which examines whether bank capital ratios and default risk are associated with the gender of the bank’s Chief Executive Officer (CEO) and Chairperson of the board. Given the documented gender-based differences in conservatism and risk tolerance, the researchers postulate that female CEOs and board Chairs should assess risks more conservatively, and thereby hold higher levels of equity capital and reduce the likelihood of bank failure during periods of market stress.

Using a large panel of U.S. commercial banks, they document that banks with female CEOs hold more conservative levels of capital after controlling for the bank’s asset risk and other attributes. Furthermore, while neither CEO nor Chair gender is related to bank failure in general, they find strong evidence that smaller banks with female CEOs and board Chairs were less likely to fail during the financial crisis. Overall, these findings are consistent with the view that gender-based behavioural differences may affect corporate decisions.

For more detail: Ajay Palvia, Emilia Vähämaa & Sami Vähämaa. 2015. Are Female CEOs and Chairwomen More Conservative and Risk Averse? Evidence from the Banking Industry During the Financial Crisis.
Journal of Business Ethics, 131(3), 577-594.


How women on boards affect firm value, financial performance and ethical/social compliance
The European Commission has recently proposed the introduction of legally binding quotas for women on corporate boards of European companies. This proposal has put the spotlight on the question of whether increasing female representation on the board brings economic benefits to the firm. In order to shed light on the issue, this study investigates the direct and indirect effects of women on the board on firm value. Helena Isidro & Márcia Sobral use a simultaneous equation model to estimate the effects of women on the board on firm value, financial performance, and compliance with ethical and social principles adopted by the firm.

They find no evidence that a higher female representation on the board directly affects firm’s value. However, they find indirect effects. Women on the board are positively related with financial performance (measured in terms of return on assets and return on sales) and with ethical and social compliance, which in turn are positively related with firm value. The findings in this study suggest that greater female representation on corporate boards of large European firms can increase firm value indirectly. Further, part of the indirect effect comes from stronger compliance with ethical principles, something that is not captured by accounting-based financial performance.

Find further details at: Helena Isidro & Márcia Sobral. 2015. The Effects of Women on Corporate Boards on Firm Value, Financial Performance, and Ethical and Social Compliance.
Journal of Business Ethics, 132(1), 1-19.


Increasing women in leadership: Targets and quotas as levers for cultural change
While substantial evidence is emerging internationally of positive increases in the participation of women on company boards, there is less evidence of any significant change in the proportion of women in senior executive ranks. This paper describes evidence of positive changes in the number of women on boards in Australia. Unfortunately, these changes are not mirrored in the senior executive ranks where the proportion of women remains consistently low.

Alice Klettner, Thomas Clarke & Martijn Boersma explore some of the reasons for these disproportionate changes and examine the likely effect of the recent amendments to the Australian stock exchange’s corporate governance code designed to improve gender diversity both on boards and throughout organisations. Based on the early corporate response to these regulatory changes, it is interesting to consider whether Australia’s approach in promoting voluntary self-regulation at the corporate level may be as effective in the long run as the emerging trend in Europe to apply legislated quotas for female corporate board representation.

Interview evidence is presented suggesting that the primary reasons for the lack of women in leadership are not simply lack of opportunity at the apex of the corporation, but issues at mid-management level that are unlikely to be resolved by mandatory board quotas. In some circumstances carefully monitored voluntary targets may be more effective at promoting cultural and strategic change at the heart of the corporation. In summary, mandatory quotas (set through hard law usually with sanctions for noncompliance) may achieve early and significant results in terms of female board representation.

However, voluntary targets for women’s participation on boards and in executive ranks (proposed in soft regulation such as corporate governance codes and set as part of corporate strategy) may promote more effective cultural and practical change in support of greater representation of women in leadership.

For more detail see: Alice Klettner, Thomas Clarke & Martijn Boersma. 2016. Strategic and Regulatory Approaches to Increasing Women in Leadership: Multilevel Targets and Mandatory Quotas as Levers for Cultural Change.
Journal of Business Ethics, 133(3), 395-419.


Board diversity, diversity policies and inclusion behaviours on nonprofit governance
This study examines how and when nonprofit board performance is impacted by board diversity. Specifically, Kathleen Buse and her team investigates board diversity policies and practices as well as board inclusion behaviours as mediating mechanisms for the influence of age, gender, and racial/ethnic diversity of the board on effective board governance practices.
The empirical analysis, using a sample of 1,456 nonprofit board chief executive officers, finds that board governance practices are directly influenced by the gender and racial diversity of the board and that board inclusion behaviours together with diversity policies and practices mediate the influence of the board’s gender and racial diversity on internal and external governance practices. Additionally, the researchers found an interaction effect that indicates when boards have greater gender diversity, the negative impact of racial diversity on governance practices is mitigated.

The findings suggest that board governance can be improved with more diverse membership, but only if the board behaves inclusively and there are policies and practices in place to allow the diverse members to have an impact.

Further details are at: Kathleen Buse, Ruth Sessler Bernstein & Diana Bilimoria. 2016. The Influence of Board Diversity, Board Diversity Policies and Practices, and Board Inclusion Behaviors on Nonprofit Governance Practices.  
Journal of Business Ethics, 133(1), 179-191.


It’s tougher for Chinese managerial women too.
The authors proposed a conceptual model arguing that stereotype violation and stereotype activation combine to create a narrow band of acceptable career strategies for women in management. Utilising a sample of 324 Chinese managers (162 pairs of women and men matched on education, years of work experience, and employing organization), they examined the effects of gender on three career development outcomes: number of subordinates supervised, life satisfaction, and career satisfaction.

Results indicated that being female had a significant negative main effect on all three outcomes. Ten significant interactions supported the theoretical effects of both stereotype violation and activation on women’s managerial career development, consistent with our conceptual model. The findings suggest that Chinese women in management face a narrow band of acceptable career strategies, especially in the area of creating social capital. The results highlight the importance of testing both stereotype violation and stereotype activation effects and of creating social capital through appropriate networking.

Read further at: Yunxia Zhu, Alison M. Konrad & Hao Jiao. 2016. Violation and activation of gender expectations: Do Chinese managerial women face a narrow band of acceptable career guanxi strategies?  
Asia Pacific Journal of Management, 33(1), 53-86.