Gender Stereotyping by Location, Female Director Appointments and Financial Performance
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We investigate whether female board representation and firms’ financial performance are related and whether the relationship differs for firms located in more prejudicial environments. As a proxy for prejudicial environment, we use two geographical indicators: (1) whether a firm is headquartered in a conservative “red” state (which tends to vote for Republican candidates) or in a liberal “blue” state (which tends to vote for Democratic candidates) and (2) whether the firm is located in regions where residents possess more stereotypical attitudes about gender equality. We find that both financial performance and female board representation are lower for firms headquartered in red states when compared to those in blue states, and we find similar results for firms located in regions where residents hold more gender-stereotypical views. However, financial performance improves when female directors are present regardless of the firm’s location. Evidence also shows that the incremental improvement in performance measured by Tobin’s q is greater in red-state than in blue-state companies and in regions where residents hold more gender-stereotypical views. The overall results imply that gender stereotyping holds back financial performance and that female directors help improve financial performance.
KeywordsFirm performance Female directorship Gender stereotyping
We thank Renee Adams, Bill Baber, Menghai Gao, Peter Glick, Joon Seok Moon, Michael Pevzner, Jason Sloetzer, and colleagues and workshop participants at the George Washington University, Georgetown University, University of Baltimore, 2015 American Accounting Association Annual Meeting, and the European Accounting Association Annual Congress, for helpful comments. We are indebted to two anonymous reviewers and the section editor for their valuable comments and suggestions. We thank The General Social Survey (GSS) which is a project of the independent research organization NORC at the University of Chicago, with principal funding from the National Science Foundation. The authors are listed in alphabetical order.
This study was not funded by any institutions or interest groups other than the home institution of the respective authors.
Compliance with Ethical Standards
Conflict of interest
The authors declare that each of them has no conflict of interest.
The authors did not conduct any studies with human participants or animals.
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