Association between gender diversity in board composition and firm performance : empirical evidence from Finland
1University of Oulu, Oulu Business School, Department of Accounting, Accounting
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The purpose of the study is to examine the relationship between gender diversity in board composition and firm performance. The relationship is examined using 2011 and 2012 financial performance data for 50 Finnish listed companies. Two models are used to examine the relationship between gender diversity and firm performance. The first model uses percentage of women representation on the boards to measure gender diversity. The second model uses a dummy variable with a value of 1 for boards with one woman and 0 for boards with more than one woman representation on the board. The intended relationship is examined using Ordinary Least Square (OLS) regression method. Relationship between gender diversity and firm performance is controlled for board size, firm size, leverage and industry. The business case for gender diversity is not supported in this particular study. Even after using two different models to examine the relationship between gender diversity in the boardroom and firm performance, our results did not find a significant relationship. Female board members who break the glass ceiling are professionals representing the relevant experience and competence. They have been hired endogenously to the boards after a stringent selection process. Therefore, it is argued that the issue of gender does not matter and the impact of gender diversity on the performance of a firm is insignificant. Despite the fact the Finland enjoys a gender egalitarian image, Finnish boards are still to an extent dominated by men. The study shows a moderate female representation on Finnish corporate boards i.e. 27%. However, this value is at least equal to or larger than other Nordic countries except Norway.
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