The Effects of Women on Corporate Boards on Firm Value, Financial Performance, and Ethical and Social Compliance

Isidro, Helena; Sobral, Márcia
November 2015
Journal of Business Ethics;Nov2015, Vol. 132 Issue 1, p1
Academic Journal
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. We 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. We find no evidence that a higher female representation on the board directly affects firm's value. However, we 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.


Related Articles

  • Chapter 6: Corporate governance: the stakeholder debate. Summerfield, Daniel // Guide to Business Ethics;2001, p91 

    Chapter 6 of the book "Business Ethics" is presented. It explores on the duties of the board of directors in the company's prosperity and its responsibilities towards its shareholders. It highlights the importance of effective corporate governance structures and the different approaches of...

  • Corporate Sustainability/CSR and the Influence of the Independent Director: "100% Pure" New Zealand. Wells, Philippa; Ingley, Coral; Mueller, Jens // Proceedings of the European Conference on Management, Leadership;2014, p372 

    Companies/corporates are facing pressure to expand their reporting beyond the financial to include environmental and social performance. Governments are generally reluctant to legislate for such expansion in reporting but many corporates have responded by seeking recognition for their progress...

  • Hidden Connections: The Link Between Board Gender Diversity and Corporate Social Performance. Boulouta, Ioanna // Journal of Business Ethics;Mar2013, Vol. 113 Issue 2, p185 

    This study examines whether and how female board directors may affect corporate social performance (CSP) by drawing on social role theory and feminist ethics literature. The empirical analysis, based on a sample of 126 firms drawn from the S&P500 group of companies over a 5-year period, suggests...

  • REPOSITIONING THE CORPORATE ETHICS OFFICER. Hoffman, W. Michael // Business Ethics Quarterly;Oct2010, Vol. 20 Issue 4, p744 

    In this article the author discusses aspects of business ethics and the social responsibility of business. The article was written to commemorate the 20th anniversary of the founding of "Business Ethics Quarterly," a journal dedicated to an exploration of that discipline. A number of topics are...

  • Does Confucianism Reduce Board Gender Diversity? Firm-Level Evidence from China. Du, Xingqiang // Journal of Business Ethics;Jun2016, Vol. 136 Issue 2, p399 

    This study extends previous literature on the association between Confucianism and corporate decisions by examining Confucianism's influence on board gender diversity. Using a sample of Chinese listed firms during the period of 2001-2011 and geographic-proximity-based Confucianism variables, I...

  • CORPORATE SOCIAL RESPONSIBILITY AND OPERATING PERFORMANCE. Harjoto, Maretno A.; Hoje Jo // Journal of the Academy of Business & Economics;1/20/2008, Vol. 8 Issue 1, p59 

    We examine the effects of internal and external corporate governance and monitoring mechanisms on the firms' choice of corporate social responsibility (CSR) engagement and operating performance engaging in CSR activities. Employing a large and extensive sample during the 1993-2004 period, we...

  • UNDERSTANDING THE ROLE OF BOARDS IN CONTEMPORARY ORGANIZATIONS. ZILBERG, T. // Managerial Challenges of the Contemporary Society;2013, Issue 6, p174 

    Roles and responsibilities of boards of directors (BoDs) in contemporary organizations are continuously changing as a result of global or local increased regulations, as well as a response to financial and ethical scandals, irregularities in management, heightened societal expectations, demands...

  • Board Composition and Corporate Social Responsibility: An Empirical Investigation in the Post Sarbanes-Oxley Era. Zhang, Jason; Zhu, Hong; Ding, Hung-bin // Journal of Business Ethics;May2013, Vol. 114 Issue 3, p381 

    Although the composition of the board of directors has important implications for different aspects of firm performance, prior studies tend to focus on financial performance. The effects of board composition on corporate social responsibility (CSR) performance remain an under-researched area,...

  • Difficulties in Overseeing Ethical Policy. Andrews, Kenneth R. // California Management Review;Summer84, Vol. 26 Issue 4, p133 

    This article discusses the role of the boards of directors in regards to business ethics. The article discusses Ralph Nader's literature on reforming corporate governance. The author states that contrary to public opinion, in reality the board is not responsible to shareholders because the...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics