Do Women Directors Improve Firm Performance? Empirical Evidence from China
Many studies have examined the relationship between gender diversity on the board and firm performance for developed countries, but similar efforts for developing countries are rare. Employing a panel of over 1,000 listed firms for a period from 1999 to 2007, this study assesses the impact of women directors on the performance of listed firms in China. Our main results suggest that: 1) The percent of women directors has a positive impact on firm performance as measured by return on sales (ROS) or return on assets (ROA), 2) The number of women directors matters: A board with three or more women directors has a much stronger impact on firm performance than a board with one or two women directors, 3) The positive impact of women directors on firm performance is significant among firms controlled by legal person owners but not significant among firms controlled by state owners. This result corroborates the view that legal person owners tend to monitor the listed firms in China more effectively than state owners (Chen, Firth, Gao and Rui, 2006, Sun and Tong, 2003). In sum, this study indicates that in China, women directors have a positive impact on firm performance, contingent on the ownership structure of listed firms.