Gender composition on the board of directors and firm performance

The purpose of this thesis is to examine if it exists a relationship between gender diversity on the board of directors and firm performance and to answer if a legislated gender quota for corporate boards would affect the performance of Swedish public firms. The approach in this study is quantitative and conducted on 48 large cap companies listed on Nasdaq OMX Stockholm, during the time period 2007-2016. The authors use panel data regression models. Firm fixed effects and period fixed effects is used in order to account for the endogeneity problem between female board members and firm performance. The authors examine two different measures of firm performance; ROA and Tobin’s Q as well as two measures of female board representation; the share of female directors and a female dummy variable that takes on the value of 1 if at least one women is represented and zero otherwise. The percentage of female directors has a positive effect on the natural logarithm of Tobin’s Q, the relationship is significant at the 10% significance level. This indicates that grater gender diversity may add value to the shareholders. Gender diversity on corporate boards does not have a significant impact on ROA. The presence of at least one women has no effect regardless of performance measure. It is clear that different results occur depending on how firm performance is measured. It should be emphasized that this study shows no significant negative relationship between gender-diverse corporate boards and firm performance. The results suggest that Swedish public firms should not worry about destroying shareholder value nor worse performance when adding females to their corporate boards