Impact of Gender Diversity on Firm Performance

P-Number/Name: P15208243/ Michalis Loizou
Module Code: ACFI5028
Module Title: Dissertation
Title of the Assignment: Draft Literature Review
Supervisor name: Dr Amal Ahmad Khair
Word count: 4950
Date: 30/06/2019

1
Table of Contents
Introduction......................................................................................................................................2
1. Review of Literature.................................................................................................................3
1.1. Gender Diversity in Corporate Boards and the Impact on Firm Performance..................3
1.2. Board Diversity and Firm Performance in Emerging Markets.........................................4
1.3. Board Gender Diversity and Firm Performance...............................................................5
1.4. Intra-Firm Networks, Board Directors and Firm Performance.........................................5
1.5. Corporate Boards, Gender Diversity and Firm Performance – The Case of Malaysia,
South Korea, Hong Kong and Singapore....................................................................................6
1.6. Firm Performance and Gender Diversity in Turkey.........................................................7
1.7. Educational Levels, Gender Quotas and Firm Performance.............................................8
1.8. Female Representation on Corporate Boards and Firm Performance...............................9
1.9. Firm Performance and Diversity – A Dynamic Capabilities Perspective.........................9
1.10. Board Diversity and the Performance of a Bank.........................................................10
1.11. Firm Risk and Boardroom Diversity...........................................................................11
1.12. Understanding the Complex Nature of Board Diversity.............................................12
1.13. Gender Diversity, Performance of Firms and Emerging Markets...............................12
1.14. Board Diversity and the Performance of Firms – The Case of Small Sized Enterprises
in the United Kingdom..............................................................................................................13
1.15. Performance of Financial Firms and Gender Diversity – The Case of Spain.............14
2. Gaps in the Literature Reviewed............................................................................................16

2
Conclusion.....................................................................................................................................16
Research Questions........................................................................................................................17
References......................................................................................................................................18

3
CHAPTER 2 LITERATURE REVIEW
2.0 Introduction
Diversity in a corporate board can significantly impact the performance of a firm. When a
corporate board comprises of members who hail from diverse ethnic, cultural, economic and
religious backgrounds, it has a direct influence on the manner in whichway the firm performs
both in the short term and over the long term. A diverse board structure is an egalitarian board
structure and ought to for the most part, incorporate gender diversity over and above the other
forms of diversity that have been mentioned (Terjesen et al. 2015). (citation needed here). It is
important to remember, that while board diversity is crucial, concentrating on merely one form
of diversity or one aspect of diversity is not going to suffice. Both professional social diversity
and social professional diversity need to be addressed if a firm has tomust move in forward
direction. Social diversity implies the type of diversity that is related to age, gender, ethnicity and
race while professional diversity refers to diversity in terms of the positions that are held within
the setup of the firm (Marinova et al. 2015). (citation needed here). If both social and
professional diversity are addressed by a firm then this will end up increasing diversity in terms
of perspectives on the board of the firm, hence increasing firm performance.
This assignment chapter is organized into xx sections. It begins by reviewing engages in
an in-depth review of secondary previous literature that exists on the subject matter of board
diversity and the way that this is seen to impact the performance of a firm (i.e. section 2.1).
Section 2.2 reviews.... Section 2.3 ..... Section 2.4 The report concludes by pointing out the
many discusses the implications of the literature review by highlighting the literature gaps in the

4
literature that has been reviewed, thereby alluding to the areas in which research work is yet to
be undertaken and should be undertaken with respect to this subjectby this study through the
research questions. Section 2.5 concludes the chapter.
2.1 Review of Literature
Gender Diversity in Corporate Boards and the Impact on Firm Performance
It has been discovered by a growing body of researchers that gender diversity in
corporate boards can impact greatly the performance of a firm. For instance, Terjesen et al.
(2015), have undertaken a study on the impact that independent as well as female directors of a
corporate board can have on the performance of a firm. The study engages in an empirical
analysis of whether or gender diversity can end up having a strong and positive influence on the
performance of the firm especially with regard to the efficiency and independence of directors.
The research makes use of data that has been retrieved from as many as three thousand eight
hundred and seventy-six firms that are situated in as many as forty seven countries of the globe.
It was found by conducting this research that firms that have female directors are characterized
by a higher rate of performance compared to firms that do not have female directors. A few of
the tools that were made use of by the authors in order to investigate the matter include
accounting and market measures such as the returns on assets measure and the Tobin Q measure.
What the results of the research carried out by Terjeseon et al. (2015), also appear to suggest is
that directors who are externally independent have no contribution to make to the performance of
a firm until and unless the board of that particular firm is one that is well diversified. The
research results are those that hold true with respect to various types of robustness tests and

5
estimation models. What the findings of the research done by Terjeson et al. (2015), point to
overall is that the presence of female directors in a corporate board is something that is seen to
enhance the effectiveness of the board’s performance and that firms which operate in a complex
business environment are firms that feature corporate boards where the gender balance is always
assured.
1.1. Board Diversity and Firm Performance in Emerging Markets
Ararat et al. (2015), have undertaken a study on how board diversity is seen to affect the
performance of firms in emerging markets. Evidence is provided by the researchers with respect
to various channels of controlled firms. The indirect impact that demographic board diversity is
seen to have on the performance of a firm via board monitoring is something that has been
investigated in great detail by Ararat et al. (2015), specifically in a context where the boards are
those that are relatively homogenous regarding structural diversity. The research makes use of
data that has been retrieved from the country of Turkey and the investigation is one that is
contextualized through exploration of the impact or influence which ownership configurations
are seen to have on effect of diversity. It has been discovered by Ararat et al. (2015), that a non-
linear and positive relationship is seen to exist between the performance of a firm and
demographic diversity which is mediated by the monitoring efforts of the board. The impact of
monitoring is one that is found to be entirely contingent upon controlling the propensity of
shareholders to expropriate and which is measured by control rights being deviated from the
wedge, or cash flow rights. Ararat et al. (2015), argue that demographic diversity is something
that is therefore significantly seen to enhance the performance of a firm through mitigation of the
negative effects that a wedge can have on board monitoring. The discoveries that have been
made by Ararat et al. (2015), render empirical support for importance of all types of contextual