Darmadi, Salim (2010): Do Women in Top Management Affect Firm Performance? Evidence from Indonesia. Forthcoming in: Corporate Governance: The International Journal of Business in Society
Download (183Kb) | Preview
This paper investigates the relationship between gender diversity on management boards and financial performance of Indonesian listed companies. We conduct cross-sectional regression analysis based on a sample comprising 92.4 percent of public firms listed on the Indonesia Stock Exchange (IDX). We find that the representation of female top executives is negatively related to both accounting and market performance, suggesting that female representation is not associated with improved level of performance. From correlation analysis, our results also reveal that smaller firms, which tend to be family-controlled, are more likely to have higher proportion of female members on management boards. This implies that large firms are “tougher” for women in terms of opportunities to hold seats on the board.
|Item Type:||MPRA Paper|
|Original Title:||Do Women in Top Management Affect Firm Performance? Evidence from Indonesia|
|Keywords:||Corporate governance; Gender diversity; Female representation; Financial performance; Indonesia|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General
J - Labor and Demographic Economics > J1 - Demographic Economics > J16 - Economics of Gender; Non-labor Discrimination
|Depositing User:||Salim Darmadi|
|Date Deposited:||11. May 2012 08:09|
|Last Modified:||11. Feb 2013 18:15|
Achmad, T. (2007), “Corporate governance of family firms and voluntary disclosure: the case of Indonesian manufacturing firms”, Doctor of Philosophy thesis, The University of Western Australia, Perth.
Adams, R.B., Almeida, H., and Ferreira, D. (2009), “Understanding the relationship between founder-CEOs and firm performance”, Journal of Empirical Finance, Vol. 16 No. 1, pp. 136-150.
Adams, R.B. and Ferreira, D. (2004), “Gender diversity in the boardroom”, working paper, European Corporate Governance Institute, Brussels.
Adams, R.B. and Ferreira, D. (2009), “Women in the boardroom and their impact on governance and performance”, Journal of Financial Economics, Vol. 94 No. 2, pp. 291-309.
Agrawal, A. and Knoeber, C.R. (1996), “Firm performance and mechanisms to control agency problems between managers and shareholders”, Journal of Financial and Quantitative Analysis, Vol. 31 No. 3, pp. 377-397.
Ararat, M., Aksu, M., and Cetin, A.T. (2010), “Impact of board diversity on boards’ monitoring intensity and firm performance: Evidence from the Istanbul Stock Exchange”, paper presented at the 17th Annual Conference of the Multinational Finance Society, 27-30 June, Barcelona, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1572283 (accessed 1 June 2010).
Baysinger, B.D. and Butler, H.N. (1985), “Corporate governance and board of directors: performance effects of changes in board composition”, Journal of Law, Economics and Organisation, Vol. 1 No. 1, pp. 101-124.
Bär, M., Niessen, A., and Ruenzi, S. (2009), “The impact of team diversity on mutual fund performance”, working paper, University of Cologne, Centre for Financial Research, Cologne, February.
Bhagat, S. and Black, B. (1999), “The uncertain relationship between board composition and firm performance”, Business Lawyer, Vol. 54 No. 3, pp. 921-963.
Blau, P.M. (1977), Inequality and Heterogeneity, The Free Press, New York, NY.
Bøhren, Ø. and Strøm, R. (2007), “Aligned informed and decisive: Characteristics of value-creating boards”, working paper, Norwegian School of Management, Oslo, 12 February.
Brooks, C. (2008), Introductory Econometrics for Finance, 2nd edition, Cambridge University Press, Cambridge.
Campbell, K. and Minguez-Vera, A. (2008), “Gender diversity in the boardroom and firm financial performance”, Journal of Business Ethics, Vol. 83 No. 3, pp. 435-451.
Carter, D.A., Simkins, B.J., and Simpson, W.G. (2003), “Corporate governance, board diversity, and firm value”, Financial Review, Vol. 38 No. 1, pp. 33-53.
Claessens, S., Djankov, S., and Lang, L.H.P. (2000), “The separation of ownership and control in East Asian corporations”, Journal of Financial Economics, Vol. 58 No. 1-2, pp. 81-112.
Coffey, B.S. and Wang, J. (1998), “Board diversity and managerial control as predictors of corporate social performance”, Journal of Business Ethics, Vol. 17 No. 14, pp. 1595-1603.
Coles, J.L., Daniel, N.D., and Naveen, L. (2008), “Boards: Does one size fit all?” Journal of Financial Economics, Vol. 87 No. 2, pp. 329-356.
Cox, Jr., T. (1991), “The multicultural organization”, Academy of Management Executive, Vol. 5 No. 2, pp. 34-47.
Cox, T.H. and Blake, S. (1991), “Managing cultural diversity: implications for organizational competitiveness”, Academy of Management Executive, Vol. 5 No. 3, pp. 45-56.
Dwyer, S., Richard, O.C., and Chadwick, K. (2003), “Gender diversity in management and firm performance: the influence of growth orientation and organizational culture”, Journal of Business Research, Vol. 56 No. 12, pp. 1009-1019.
Eagly, A. H., Johannesen-Schmidt, M. C., and van Engen, M. L. (2003), “Transformational, transactional, and laissez-faire leadership styles: a meta-analysis comparing women and men”, Psychological Bulletin, Vol. 129 No. 4, pp. 569–591.
Eagly, A.H. and Johnson, B.T. (1990), “Gender and leadership style: a meta-analysis”, Psychological Bulletin, Vol. 108 No. 2, pp. 233-256.
Earley, P.C. and Mosakowski, E. (2000), “Creating hybrid team cultures: an empirical test of transnational team functioning”, Academy of Management Journal, Vol. 43 No. 1, pp. 26-49.
Eisenberg, T., Sundgren, S., and Wells, M. (1998), “Larger board size and decreasing firm value in small firms”, Journal of Financial Economics, Vol. 48 No. 1, pp. 35-54.
Eklund, J.E., Palmberg, J., and Wiberg, D. (2009). “Ownership structure, board composition, and investment performance”, working paper, Centre for Excellence for Science and Innovation Studies, Stockholm, March.
Equal Opportunity for Women in the Workplace Agency (EOWA) (2008), EOWA 2008 Australian Census of Women in Leadership, EOWA, Sydney.
Erhardt, N.L., Werbel, J.D., and Shrader, C.B. (2003), “Board of director diversity and firm financial performance”, Corporate Governance: An International Review, Vol. 11 No. 2, pp. 102-111.
European Professional Women’s Network (EPWN) (2006), “Second bi-annual European PWN board women monitor 2006: Scandinavia strengthens its lead”, available at: http://www.europeanpwn.net/files/boardwomen_press_release120606_1.pdf (accessed 1 June 2010).
Francoeur, C., Labelle, R., and Sinclair-Desgagné, B. (2008), “Gender diversity in corporate governance and top management”, Journal of Business Ethics, Vol.81 No. 1, pp. 83-95.
Goodstein, J., Gautam, K., and Boeker, W. (1994). “The effects of board size and diversity on strategic change”, Strategic Management Journal, Vol. 15 No. 3, pp. 241-250.
Granleese, J. (2004), “Occupational pressures in banking: Gender differences”, Women in Management Review, Vol. 19 No. 4, pp. 219-225.
Gujarati, D.N. (2003), Basic Econometrics, 4th edition, McGraw-Hill, New York.
Hambrick, D.C., Cho, T.S., and Chen, M.J. (1996), “The influence of top management team heterogeneity on firms’ competitive moves”, Administrative Science Quarterly, Vol. 41 No. 4, pp. 659-684.
Hambrick, D.C. and Mason, P.A. (1984), “Upper echelons: The organizations as a reflection of its top managers”, Academy of Management Review, Vol. 9 No. 2, pp. 193-206.
Haniffa, R. and Hudaib, M. (2006), “Corporate governance structure and performance of Malaysian listed companies”, Journal of Business Finance and Accounting, Vol. 33 No. 7-8, pp. 1034-1062.
Hirsch, B.T. (1993), “Functional form in regression models of Tobin’s q”, Review of Economics and Statistics, Vol. 75 No. 2, pp. 381-385.
Hurst, D.K., Rust, J.C., and White, R.E. (1989), “Top management teams and organizational renewal”, Strategic Management Journal, Vol. 10 No. S1, pp. 87-105.
Ibarra, H. (1993), “Personal networks of women and minorities in management: a conceptual framework”, Academy of Management Review, Vol. 18 No. 1, pp. 56-87.
Jackson, S.E. and Alvarez, E.B. (1992), Diversity in the Workplace: Human Resources Initiatives, The Guilford Press, New York.
Joh, S.W. (2003), “Corporate governance and firm profitability: evidence from Korea before the economic crisis”, Journal of Financial Economics, Vol. 68 No. 2, pp. 287–322.
Kilduff, M., Angelmar, R., and Mehra, A. (2000), “Top management-team diversity and firm performance: Examining the role of cognitions”, Organization Science, Vol. 11 No. 1, pp. 21-34.
Krishnan, G.P. and Parsons, L.M. (2008), “Going to the bottom line: an exploration of gender and earnings quality”, Journal of Business Ethics, Vol. 78 No. 1-2, pp. 65-76.
Krishnan, H.A. and Park, D. (2005), “A few good women—on top management teams”, Journal of Business Research, Vol. 58 No. 12, pp. 1712-1720.
Krivogorsky, V. (2006), “Ownership, board structure, and performance in continental Europe”, International Journal of Accounting”, Vol. 41 No. 2, pp. 176-197.
Kusumastuti, S., Supatmi, and Sastra, P. (2007), “Pengaruh board diversity terhadap nilai perusahaan dalam perspektif corporate governance” (The impact of board diversity on firm value: Corporate governance perspectives), Jurnal Akuntansi dan Keuangan (Journal of Accounting and Finance), Vol. 9 No. 2, pp. 88-98.
La Porta, R., Lopez-de-Silanes, F., and Shleifer, A. (1999), “Corporate ownership around the world”, Journal of Finance, Vol. 54 No. 2, pp. 471-518.
Lobel, S.A. and Clair, L.S.T. (1992), “Effects of family responsibilities, gender, and career identity salience on performance outcomes”, Academy of Management Journal, Vol. 35 No. 5, pp. 1057-1059.
Luckerath-Rovers, M. (2010), “Women on boards and firm performance”, working paper, Erasmus University, Rotterdam, April.
Mak, Y.T. and Kusnadi, Y. (2005), “Size really matters: further evidence on the negative relationship between board size and firm value”, Pacific-Basin Finance Journal, Vol. 13 No. 3, pp. 301-318.
Marinova, J., Plantenga, J., and Remery, C. (2010), “Gender diversity and firm performance: Evidence from Dutch and Danish boardrooms,” discussion paper, University of Utrecht, Utrecht School of Economics, Utrecht, January.
Medland, D. (2004), “Small steps for womenkind”, Corporate Board Member Europe, Winter.
Millstein, I.M. and MacAvoy, P.W. (1998), “The active board of directors and performance of the large publicly traded corporation”, Columbia Law Review, Vol. 98 No. 5, pp. 1283-1322.
Nielsen, S. and Huse, M. (2010), “The contribution of women on boards of directors: going beyond the surface”, Corporate Governance: An International Review, Vol. 18 No. 2, pp. 136-148.
Omar, A. and Davidson, M.J. (2001). “Women in management: a comparative cross-cultural overview”, Cross Cultural Management: An International Journal, Vol. 8 No. 3-4, pp. 35-67.
Oxelheim, L. and Randøy, T. (2003), “The impact of foreign board membership on firm value”, Journal of Banking and Finance, Vol. 27 No. 12, pp. 2369-2392.
Randøy, T., Oxelheim, L., and Thomsen, S. (2006), “A Nordic perspective on corporate board diversity”, working paper, Nordic Innovation Centre, Oslo, November.
Richard, O.C., Barnett, T., Dwyer, S., and Chadwick, K. (2004), “Cultural diversity in management, firm performance, and the moderating role of entrepreneurial orientation dimensions”, Academy of Management Journal, Vol. 47 No. 2, pp. 255-266.
Rigg, C. and Sparrow, J. (1994), “Gender, diversity, and working styles”, Women in Management Review, Vol. 9 No. 1, pp. 9-16.
Robinson, G. and Dechant, K. (1997), “Building a business case for diversity”, Academy of Management Executive, Vol. 11 No. 3, pp. 21-30.
Rose, C. (2007), “Does female board representation influence firm performance? The Danish evidence”, Corporate Governance: An International Review, Vol. 15 No. 2, pp. 404-413.
Setia-Atmaja, L.Y. (2008), “Does board size really matter? Evidence from Australia”, Gadjah Mada International Journal of Business, Vol. 10 No. 3, pp. 331-352.
Shrader, C.B., Blackburn, V.B., and Iles, P. (1997), “Women in management and firm financial performance: An exploratory study”, Journal of Managerial Issues, Vol. 9 No. 3, pp. 355-372.
Siciliano, J.I. (1996), “The relationship of board member diversity to organizational performance”, Journal of Business Ethics, Vol. 15 No. 12, pp. 1313-1320.
Smith, N., Smith, V., and Verner, M. (2005), “Do women in top management affect firm performance? A panel study of 2500 Danish firms”, discussion paper, Institute for the Study of Labor, Bonn, August.
Tacheva, S. and Huse, M. (2006), “Women director and board task performance: Mediating and moderating effects of board working style”, paper presented at the European Academy of Management Conference, 17-20 May, Oslo, available at: http://www.boeckler.de/pdf/v_2006_03_30_huse2_f5.pdf (accessed 1 June 2010).
Tharenou, P., Latimer, S., and Conroy, D. (1994), “How do you make it to the top? An examination of influences on women’s and men’s managerial advancement”, Academy of Management Journal, Vol. 37 No. 4, pp. 899-931.
Treichler, M. (1995), “Diversity of board members and organizational performance: an integrative perspective”, Corporate Governance: An International Review, Vol. 3 No. 4, pp. 189-200.
Ye, K., Zhang, R., and Rezaee, Z. (2010), “Does top executive gender diversity affect earnings quality? A large sample analysis of Chinese listed firms”, Advances in Accounting, Vol. 26 No. 1, pp. 47-54.
Van der Zahn, J.L.W.M. (2004), “Association between gender and ethnic diversity on the boards of directors of publicly listed companies in South Africa and intellectual capital performance”, Financial Reporting, Regulation & Governance, Vol. 3 No. 1.
Wang, D. (2006), “Founding family ownership and earnings quality”, Journal of Accounting Research, Vol. 44 No. 3, pp. 619-656.
Weimar, J., Pape, J.C. (1999), “A taxonomy of systems of corporate governance”, Corporate Governance: An International Review, Vol. 7 No. 2, pp. 152-166.
Weir, C., Laing, D., and McKnight, P.J. (2002), “Internal and external governance mechanisms: their impact on the performance of large UK public companies”, Journal of Business Finance and Accounting, Vol. 29 No. 5-6, pp. 579-611.
Westhead, P. and Cowling, M. (1998), “Family firm research: the need for a methodological rethink”, Entrepreneurship Theory and Practice, Vol. 23 No. 1, pp. 31-56.
Wiwattanakantang, Y. (2001), “Controlling shareholders and corporate value: evidence from Thailand”, Pacific-Basin Finance Journal, Vol. 9 No. 4, pp. 323-362.
Yermack, D. (1996), “Higher market valuation of companies with a small board of directors”, Journal of Financial Economics, Vol. 40 No. 2, pp. 185-211.