Whitman Voices

Introduction

Female representation on executive boards leads to increased bottom line

Female representation on executive boards leads to increased bottom line

Kris Byron, PhD, associate professor of management at the Martin J. Whitman School of Management at Syracuse University, along with Dr. Corinne Post, associate professor in the department of management at Lehigh University, have recently conducted research and come out with results of a study that reveals how female representation on executive boards leads to an increase in a firm’s bottom line. They performed 140 studies covering numerous firms in 36 countries based off two factors. They used accounting measures that evaluate profitability through past performances, as well as marketing measures, which report how investors believe the firm will progress in future years.

On top of their monumental discovery, Bryon and Post also found that countries with stronger regulations on protecting shareholders’ interests showed even higher performance financially due to diverse executive board representation. The research suggests that these firms with an increased amount of female directors are more inclined to monitor firm and employee performance.

Furthermore, countries that contain stronger gender parity display a positive correlation between female board representation and firm market performance. According to their findings, these more equally ruled countries with firms holding female representatives have a highly influential effect on raising a share price for a company. Both believe that this finding results from societal context swaying how investors tend to evaluate firms with female directors. Bryon said that in countries that provide women with an equal access to education and employment, investors generally provide positive evaluations of having women on execute boards.

“With more women on boards, a wider range of insight, perspectives, and experiences are brought to bear on the issues a board faces,” Byron said. After successfully performing research and obtaining the flattering results, with the help of Dr. Post, it seems safe to say that it is favorable for firms to have female representation on the executive boards.