Literature Review Women on boards and in TMTS and firm performance52 governance also seems to play a role Gender di versity on corporate boards has a positive impact on the performance of firms that otherwise have weak governance and shareholder rights as inten sified monitoring could enhance firm value Adams Ferreira 2009 The effects are negative for companies with strong shareholder rights sugge sting that increased gender diversity might lead to over monitoring Adams and Ferreira contextualize their findings and the current debate on enforcing gender quotas in the boardroom They conclude that their results are evidence of female directors substantial and value relevant impact on board structure However the average effect of gender diversity on firm performance is negative Thus in their view no evidence supports the introduction of gender quotas In contrast the results suggest that mandating gender quotas for board directors can even reduce firm value for companies with strong governance 2 3 6 Evidence for a curvilinear relationship Numerous studies take a new perspective by ex ploring the relation between gender diversity on corporate boards and firm financial performance based on critical mass theory Joecks Pull Vet ter 2013 Konrad Kramer Erkut 2008 Torchia et al 2011 Joecks et al 2013 find evidence for a non linear and concave relation between gen der diversity on the board and firm performance measured using ROE The U shaped link indicates that it needs a critical mass of about 30 percent women on the board in order to realize potential benefits stemming from a more diverse board It further suggests that increased gender diversity on the board will only enhance performance if fe male representation is ten percent or higher and performance will be better than the one of male boards only above the threshold of 30 percent At very low levels of female representation below ten percent an increase in diversity might even have a negative impact on firm performance Joecks et al 2013 This U shaped relationship may be one possible explanation for the controversial empirical evidence on the relation of gender diversity in the boardroom and firm performance Several other studies also shift away from assuming a simple linear relation between diversity and performan ce by furnishing evidence for a curvilinear rela tion Ali Kulik Metz 2011 Ali Ng Kulik 2014 Hoogendorn et al 2013 Richard Dwyer Barnett Chadwick 2004 The findings are also in line with Williams and O Reilly s 1998 assumption that the overall effect of increasing diversity has a U shaped form Difference lies in the shape of the curve besides differing performance measures and assumptions regarding moderating effects Joecks et al 2013 present a concave U shaped rela tion whereas Hoogendorn et al 2013 show an inverted U shaped relationship between share of women in business teams and profits An inverted U shaped relationship for gender diversity and pro ductivity is confirmed by Ali Ng und Kulik 2014 as well as Ali Kulik and Metz 2011 Richard et al 2004 cannot fully support their hypothesized curvilinear relationship between cultural diversity in management and firm performance but when adding moderating effects such as firm s level of risk taking to their analysis they observe an inver ted U shaped relationship between gender diver sity in management and productivity expressed by the logarithm of net income per employee in firms characterized by high levels of risk taking For firms with low levels of risk taking the relation is concave U shaped The authors interpretation is that totally homogeneous groups may not suc ceed in an environment with aggressive competi tion requiring decision speed whereas the positive Women on boards and in TMTs and firm performance

Vorschau DIRK-Forschungsreihe Band 21 Workforce diversity and personal policies Seite 52
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