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Title: The effects of women on corporate boards on firm value, financial performance, and ethical and social compliance
Authors: Isidro, H.
Sobral, M.
Keywords: Board of directors
Corporate governance
Financial performance
Firm value
Issue Date: 2015
Publisher: Springer Verlag
Abstract: The European Commission has recently proposed the introduction of legally binding quotas for women on corporate boards of European companies. This proposal has put the spotlight on the question of whether increasing female representation on the board brings economic benefits to the firm. In order to shed light on the issue, this study investigates the direct and indirect effects of women on the board on firm value. We use a simultaneous equation model to estimate the effects of women on the board on firm value, financial performance, and compliance with ethical and social principles adopted by the firm. We find no evidence that a higher female representation on the board directly affects firm's value. However, we find indirect effects. Women on the board are positively related with financial performance (measured in terms of return on assets and return on sales) and with ethical and social compliance, which in turn are positively related with firm value. The findings in this study suggest that greater female representation on corporate boards of large European firms can increase firm value indirectly. Further, part of the indirect effect comes from stronger compliance with ethical principles, something that is not captured by accounting-based financial performance.
Peer reviewed: yes
DOI: 10.1007/s10551-014-2302-9
ISSN: 0167-4544
Accession number: WOS:000365710400001
Appears in Collections:BRU-RI - Artigos em revistas científicas internacionais com arbitragem científica

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