Do women in top management affect firm performance? A panel study of 2,500 Danish firms

Purpose - This paper aims to examine the relationship between management diversity and firm performance in the case of women in top executive jobs and on boards of directors. Corporate governance literature argues that board diversity is potentially positively related to firm performance. This hypothesis is tested in the paper. Design/methodology/approach - In this paper with the use of data for the 2,500 largest Danish firms observed during the period 1993-2001 various statistical models for firm performance are specified and estimated. The main focus in the models is the estimated relationship between the proportion of women in top management (CEOs and on boards of directors) and firm performance. Findings - The results in this paper show that the proportion of women in top management jobs tends to have positive effects on firm performance, even after controlling for numerous characteristics of the firm and direction of causality. The results show that the positive effects of women in top management strongly depend on the qualifications of female top managers. Originality/value - This paper provides solid statistical evidence of the effects of women in top management on firm performance. The use of a large sample and the panel nature of the data set make it possible to properly control for direction of causality and, furthermore, much firm and individual information is included to estimate genuine effects of women in top management.