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Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?”

Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?” The under-representation of women on boards is a heavily discussed topic—not only in Germany. Based on critical mass theory and with the help of a hand-collected panel dataset of 151 listed German firms for the years 2000–2005, we explore whether the link between gender diversity and firm performance follows a U-shape. Controlling for reversed causality, we find evidence for gender diversity to at first negatively affect firm performance and—only after a “critical mass” of about 30 % women has been reached—to be associated with higher firm performance than completely male boards. Given our sample firms, the critical mass of 30 % women translates into an absolute number of about three women on the board and hence supports recent studies on a corresponding “magic number” of women in the boardroom. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Ethics Springer Journals

Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?”

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References (69)

Publisher
Springer Journals
Copyright
Copyright © 2012 by Springer Science+Business Media Dordrecht
Subject
Philosophy; Ethics; Economic Growth; Management/Business for Professionals; Quality of Life Research
ISSN
0167-4544
eISSN
1573-0697
DOI
10.1007/s10551-012-1553-6
Publisher site
See Article on Publisher Site

Abstract

The under-representation of women on boards is a heavily discussed topic—not only in Germany. Based on critical mass theory and with the help of a hand-collected panel dataset of 151 listed German firms for the years 2000–2005, we explore whether the link between gender diversity and firm performance follows a U-shape. Controlling for reversed causality, we find evidence for gender diversity to at first negatively affect firm performance and—only after a “critical mass” of about 30 % women has been reached—to be associated with higher firm performance than completely male boards. Given our sample firms, the critical mass of 30 % women translates into an absolute number of about three women on the board and hence supports recent studies on a corresponding “magic number” of women in the boardroom.

Journal

Journal of Business EthicsSpringer Journals

Published: Nov 21, 2012

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