Firm Performance and Women on the Board: Evidence from Spanish Small and Medium-Sized Enterprises

ABSTRACT

This study examines gender diversity on boards of directors in a sample of nonfinancial Spanish small and medium-sized enterprises (SMEs) for 2003–8, finding that the probability of women on the board increases with firm performance, defined as return on assets, and family ownership, but diminishes with corporate ownership and firm risk. It also finds, when examining the full sample, a positive effect of the presence of women board members on firm performance. The study also obtains a similar positive effect in most subsamples, including in firms with corporate ownership, where family connections play less role in the election of board members, and in firms in the secondary and tertiary sectors, which are characterized by having greater proximity to final consumers than those in the primary sector.

KEYWORDS:

• Gender
• women's labor force participation
• ethics

JEL Codes::

• G30
• J16

ACKNOWLEDGEMENTS

The authors acknowledge financial support from Fundación CajaMurcia. The SABI database employed for the analysis was provided by Bureau Van Dijk.

NOTES ON CONTRIBUTORS

Juan Francisco Martín-Ugedo is Associate Professor of Corporate Finance at the University of Murcia. He holds a Masters degree in Advanced European Studies from the College of Europe, Brugge, and a PhD in Business Administration from the University of Murcia. He is currently performing research on corporate finance and corporate governance. He has published in peer-reviewed international journals such as Journal of Business Finance and Accounting, International Journal of Human Resource Management, and Review of Quantitative Finance and Accounting.

Antonio Minguez-Vera is Associate Professor of Financial Economics at the University of Murcia. He holds a PhD in Economics and Business from the Technical University of Cartagena. His main research interests at present focus on gender diversity, corporate finance, and corporate governance. He has published in peer-reviewed international journals such as Journal of Business Ethics, International Journal of Human Resource Management, and International Review of Financial Analysis.

Notes

¹ For Spain, they used firms included in IBEX-35 index (thirty-five top companies in market capitalization).

² For an empirical analysis examining gender discrimination on the boards of Spanish large firms, see Ruth Mateos de Cabo, Ricardo Gimeno, and Lorenzo Escot Mangas (2011).

³ It assumed that Pi ln Pi=0 when Pi=0.

⁴ Stefan Baumgärtner (2006) goes into detail about the differences between these two indexes.

⁵ For quoted firms, Tobin's Q is usually employed as a measure of firm performance. For the sample we examine in this study, such a measure cannot be employed due to the lack of market values of the stocks.

⁶ In order to avoid the perfect multicollinearity problem, the dummy indicative of the presence of an institution as major shareholder, Institution, is not included in the model.

⁷ Alternatively, the same analyses are performed separately including the variables Family and Corporate. The results do not change. We have also replaced the Family or Corporate variables with Institution. The results show no significant effect of the variable Institution. This variable is marginal, being present only in less than 2 percent of companies.

⁸ We also observe a positive correlation between firm size and board size in our sample.