Women on Management Board and Firm Performance: Evidence from The Visegrad Group Countries

Abstract

Objective: The findings of previous research on women serving on company boards have been inconclusive, with some demonstrating a positive influence of women on company performance while others indicate a lack of impact. While certain theories advocate for the appointment of women to the board, others offer counterarguments against gender diversity within boards. The connection between women on the board and company performance may be influenced by the institutional setting, specifically a culture of gender equality. Therefore, our objective is to explore how the presence of women on the board affects company performance within a comparable institutional environment.

Research Design & Methods: The study focuses on 451 publicly traded companies in the V4 countries (i.e. Poland, Hungary, the Czech Republic, and Slovakia) over 2019-2021 period, examining the composition of management boards in terms of gender diversity. The study used four types of characteristics to describe the management board's composition, including the presence of women on the board, the percentage of female directors, Blau's index of heterogeneity, and the gender of the CEO. The study used t-tests, Mann-Whitney U tests, and data regression to investigate the impact of female directors on company efficiency and market performance.

Findings: The data shows that only 32.8% of companies have at least one woman on their management board and the average share of women on these boards is low at 12%. The study finds that companies with at least one woman on the board have higher capitalization, revenues, profit, total assets, and debt, with statistical significance. In terms of firm performance, companies with women on their board have slightly higher operating and market ratios. We find a positive relationship between operating efficiency and the percentage of women on the management board and board gender diversity, but no statistically significant association between women’s presence on the management board and market performance. Our study supports the hypothesis that a woman's presence on the management board affects firm performance.

Implications & Recommendations: The findings can be valuable and may have practical implications for policymakers and company executives who seek to improve firm performance and promote gender diversity because they provide empirical evidence that gender diversity in corporate leadership can have a positive impact on a company's performance. Policymakers can use this information to support and promote policies that encourage gender diversity in corporate leadership. Companies interested in promoting diversity can use this information to support their efforts to increase gender diversity on their management boards and potentially improve their performance.

Contribution & Value Added:

This study contributes to the ongoing discussion on gender diversity in corporate leadership and its potential impact on firm performance. By analyzing a sample of companies from CEE countries with the two-tier system of corporate governance, the study provides empirical evidence that the appointment of women to manage-ment boards is associated with higher firm performance in terms of operating efficiency. The study's findings also shed light on the differences in the representation of women on management boards between coun-tries, with Poland having the lowest representation of women. This suggests that there may be cultural or institutional factors that influence gender diversity in corporate leadership.

Keywords

board gender diversity, operating performance, market performance, the Visegrad Group, two-tier corporate governance system

Author Biography

Tomasz Sosnowski

PhD in economics, Assistant Professor at the Faculty of Economics and Sociology at the University of Lodz, Poland.

Anna Wawryszuk-Misztal

PhD in economics, Assistant Professor at the Department of Corporate Finance and Accounting at the Maria Curie-Skłodowska University in Lublin, Poland.

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