Relationship Between Gender Diversity

Running head: RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM
PERFORMANCE
RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM PERFORMANCE
Name of Student:
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RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM PERFORMANCE
Table of Contents
Chapter 1: Introduction....................................................................................................................2
1.1 Introduction............................................................................................................................2
1.2 Background of the study........................................................................................................3
1.3 Aims and objectives of the study...........................................................................................4
1.4 Problem Statement.................................................................................................................4
1.5 Research Questions................................................................................................................5
1.6 Scope of the research.............................................................................................................5
Chapter 2: Literature Review...........................................................................................................8
2.1 Mechanism of corporate governance.....................................................................................8
2.2 Performance of firm.............................................................................................................11
2.3 Gender diversity with firm performance.............................................................................14
References......................................................................................................................................17

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RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM PERFORMANCE
Chapter 1: Introduction
1.1 Introduction
The current paper deals in understanding the relationship between gender diversity on firm’s
boards and performance under the setting of United Kingdom. According to several reports, the
number of corporate bond seats held by men is lesser than that of women. Several reports are
established under this issue. Female directors comprise of 8.7 percent of the total average of
directors in countries like Australia, Japan, Canada and Europe (Al-Mamun et al. 2013). These
countries serve as the major financial hubs in the world, although the rate of women holding the
corporate board eats is comparatively lower.
Branson collected samples from corporate houses regarding the Equal Opportunity of
Women in the Workplace Agency (EOWA). The sample had only one female director among the
large number of firms that has been used in the research (Labelle, Francoeur and Lakhal 2015).
This low rate of participation or lack of female directors in the corporate world has been a
critical issue in corporate governance. The issue received significant attention from the
proponents of board diversity. According to several experts and business analysts, gender
diversity has positively affected the performance of businesses. Demographic diversity had a
positive impact on the firm in terms of revenue and productivity. According to Lückerath-Rovers
(2013), gender diversity can bring about positive returns to the firm and improve its financial
strength.

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RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM PERFORMANCE
1.2 Background of the study
EOWA published a report in 2006, by using data from 200 large and top performing
companies in Europe. As per the report, about 62 percent of the big European companies had
only single female directors who were part of the board (Solakoglu and Demir 2016). The
number was much lower in 2004, which was about 30 percent. This shows that number of single
female directors had significantly from 2004 to 2006. Newer theories were made on the
principles of corporate governance in United Kingdom. In the recent years, companies are
putting more focus on the issue of lower female board members. They are trying to increase the
percentage of female directors in the companies in order to improve the performance of the
companies (Al-Mamun et al. 2013). There has been a growing pressure on the companies in the
past few years. It has been a growing controversy in several businesses whether gender diversity
in boards can positively affect the organizations and leads to effective growth.
The current research will focus on the relation between gender equality and firm
performance. To explore the relationship between firm performance and gender equality, the
mechanism of internal and external corporate governance has been effectively used. This is done
by estimating the Tobin’s Q measurement for the establishment of statistical results and the
Return on Asset (ROA). The paper will be based on the work done by other people in this
particular field (Labelle, Francoeur and Lakhal 2015). The paper will be in line with the papers
done by other researchers that has efficiently focused on ethnic and gender diversity and its
reasonable impacts on business performance with quality output. Thus, the research paper gives
an in-depth understanding of the issue.

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RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM PERFORMANCE
1.3 Aims and objectives of the study
The aim of the paper is to estimate the association between firm performance and gender
diversity under the setting of United Kingdom by using data from various authentic sources. This
is done by taking a sample of the top sixty FTSE 100 companies that is listed under the London
Stock Exchange for a period of three years, starting from 2015 (Pletzer et al. 2015). The
outcomes of these data sets are then analyzed in an effective manner.
The paper has three main objectives which are as follows:
 To investigate whether there exists a relationship between board diversity and
financial performance by taking the data from top sixty FTSE 100 companies as
per the Return on Equity (ROE)?
 To investigate the association between board diversity and its significant impact
on financial performance of the chosen companies that is estimated as measured
by the Return on Assets (ROA)?
 To investigate whether gender diversity affects the financial performance of the
top 60 FTSE 100 firms enlisted under the London Stock exchange as per the
Tobin’s Q measurement?
1.4 Problem Statement
The problem statement is one of the important areas in a research paper that acknowledges
the gap in the research area. It addresses the points that require further investigation for effective
outcomes. Research on the current issue did not provide definite answers that raises appropriate
questions about the issue of lower single female directors, which needs further investigation
(Reguera-Alvarado, de Fuentes and Laffarga 2017). Gender presentation in corporate firms has
been a serious issue that is actively faced all board members. The primary question is whether

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RELATIONSHIP BETWEEN GENDER DIVERSITY AND FIRM PERFORMANCE
the inclusion of more female directions make any difference on the performance of firms (Green
and Homroy 2018). The purpose of the paper is to deal with the problem and to denote evidences
that establishes whether there is any change in firm performance or not.
1.5 Research Questions
The initial step in any research paper is the research question that enquires about the
concerned issue. These questions give an idea about the concerned issue that will be studied in
the paper. It guides the researcher for an affective thesis that highlights purpose of the paper
(Kakabadse et al. 2015). In order to estimate the relationship between gender diversity and firm
performance, several questions are aroused finds the gap:
 Does board gender diversity has any impact on the financial performance of the
performance of the sixty top companies under the FTSE 100 that is enlisted under the
London Stock Exchange as evaluated by Return on Equity (ROE)
 How does the board gender diversity effect the financial performance of the top sixty
enlisted companies on London Stock Exchange in terms of Return on Assets (ROA)
 Whether there is any positive or negative relationship between the financial performance
and diversity of board gender of the best sixty firms under FTSE 100 on London stock
Exchange as measured by Tobin’s Q
1.6 Scope of the research
The scope of the research is the way the paper needs to be presented. It addresses the
things that has to be covered in the research project. The scope demonstrates the content that will
be prepared by means of research for giving more satisfactory results and logical conclusions.
The research has been organized in five main chapters that is essential for a step by step analysis