The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0307-4358.htm

Board gender
Impact of board gender diversity on
diversity on firm risk firm risk
Mary Jane Lenard, Bing Yu and E. Anne York
School of Business, Meredith College, Raleigh, North Carolina, USA, and
787
Shengxiong Wu
School of Business, Texas Wesleyan University, Fort Worth, Texas, USA Received 30 June 2013
Revised 6 November 2013
19 February 2014
Abstract 27 February 2014
Purpose – The purpose of this paper is to study gender diversity on the board of directors and the Accepted 27 February 2014
relation to risk management and corporate performance as measured by the variability of stock
market return.
Design/methodology/approach – The sample consists of companies from the RiskMetrics
database from 2007 to 2011. This database contains information on corporate board of directors.
Financial variables were collected from the Compustat database and CRSP database for the years
2005-2011. The authors then measure the effect of gender diversity on corporate performance in terms
of firm risk, using the model by Cheng (2008) which measures the variability of stock market return.
Findings – The study shows that more gender diversity on the board of directors impacts firm risk by
contributing to lower variability of stock market return. The higher the percentage of female directors
on the board, the lower the variability of corporate performance.
Originality/value – The research design and findings assist in providing additional evidence about
the role of women in corporate leadership positions and the association with corporate performance.
The approach combines Cheng’s (2008) model of stock market variability with the impact of gender
diversity on the board of directors.
Keywords Corporate governance, Risk management, Corporate performance, Gender diversity
Paper type Research paper

1. Introduction
Corporate risk management is a critical concern of managers when they make
investment decisions (Li and Wu, 2009). Management risk refers to the impact that “bad
management decisions [y] have on a company’s performance and, as a consequence, on
the value of investments in that company” (Financial Industry Regulatory Authority,
2013). Risk can be measured by the volatility of cash flows, firm value, and stock market
return. Rountree et al. (2008) test the hypothesis that cash flow volatility has a negative
effect on firm value. Their results suggest that managers’ efforts to produce smooth
financial statements add value via the cash flow component of earnings and therefore
help in understanding the value of risk-management activities. Other research reflects
the role of the board of directors in mitigating risk and the effect on firm value. A board
of directors that makes less risky policy choices is helping to ensure that the firm is run in
the shareholders’ best interest (Wang, 2012). Klein (2002) found a negative relation
between board independence and abnormal accruals. Cheng (2008) found that firms with
larger boards have lower variability of corporate performance, due to the greater amount
of compromise involved to reach a consensus.
Managerial Finance
Vol. 40 No. 8, 2014
JEL Classification — G32 pp. 787-803
r Emerald Group Publishing Limited
The authors would like to thank the anonymous referees for their valuable comments and 0307-4358
suggestions. DOI 10.1108/MF-06-2013-0164
MF In this paper, we modify the model proposed by Cheng (2008) in order to examine
40,8 whether boards with more gender diversity are associated with a lower variability of
corporate performance. Our results show that a greater percentage of female directors
on the board is associated with less variability in stock return. We add to the body of
literature that studies the role of women in corporate leadership positions and the effect
on corporate performance.
788 The remainder of the paper proceeds as follows. The next section reviews the
relevant literature and hypothesis development. Section 3 presents the sample description
and research design. Section 4 analyzes the empirical results and provides additional
analysis. Finally, in Section 5, we provide a summary that concludes the study.

2. Background and hypothesis

2.1 Background and related literature
Various measures have been used to determine effective corporate governance and
its impact on the firm. Corporate governance refers to the “oversight responsibilities of
different parties for an organization’s direction, operations, and performance”
(Association of Certified Fraud Examiners, 2013, p. 2256). Lin-Hi and Blumberg (2011)
note that corporations should strive to achieve corporate governance in a way that
aligns the behavior of organizational members with sustainable and successful
operations.
A number of studies have examined the impact of corporate governance by using
various measures of firm performance. Gompers et al. (2003) used risk-adjusted stock
return as a measure of performance and found that stock returns of firms with strong
shareholder rights outperformed returns of firms with weak shareholder rights by
8.5 percent during the time period of their study. Bhagat and Bolton (2008) performed a
comprehensive analysis of the relation between corporate governance and performance.
They noted that because ownership provides the incentive for effective monitoring
and oversight of corporate decisions, board independence or ownership can be a proxy
for overall good governance. Zahra and Pearce (1989) provided a review of studies on
effective corporate governance based on four attributes of composition, characteristics,
structure, and process of the board. The authors proposed an integrative model that
features the four attributes in relation to board duties of service, strategy, and control
that contribute to firm performance. As part of board composition, they reasoned
that minority status (which refers to ethnic composition and representation of women on
the board) can better reflect the values of society at large, in addition to those of the
shareholders. The authors’ model suggests that board composition influences directors’
characteristics. Therefore, it is important to examine the composition of the board in
order to consider the effectiveness of the firm’s corporate governance and its relation to
firm performance.
Effective corporate governance can also be reflected in the variability of corporate
performance, which is stressed as a significant indicator of a firm’s ability to manage
risk. There are various measures and models for approaching the study of risk.
Allayannis and Weston (2003) studied both earnings volatility and cash flow volatility
in relation to firm value. The authors discovered that both earnings and cash flow
volatility are negatively valued by investors. A one standard deviation increase in
earnings volatility is associated with an approximate 9 percent decrease in firm value.
The authors conclude that managers’ efforts to smooth financial statements add value
to the firm. In a subsequent study of cash flow volatility, Rountree et al. (2008) found
that a 1 percent increase in cash flow volatility resulted in a 15 percent decrease in firm
value through the cash flow component of earnings. In terms of the relation between Board gender
cash flow volatility and risk management, Allayannis and Weston (2001) noted that diversity on
firms that can manage their hedging activities and thus reduce the volatility of their
financial results are valued more highly than firms that cannot do so. Related studies firm risk
by Haushalter (2000) and Geczy et al. (1997) showed that the use of hedging to reduce
cash flow volatility is related to the extent of financial leverage and financing costs and
is used to effectively manage risk. 789
Wang (2012) approached the study of risk by investigating board size and a firm’s
risky policy choices. She found that companies with smaller boards had lower leverage
but more risky investments. Companies with smaller boards were also associated with
higher future risk. Cheng (2008) studied the size of corporate boards and found that
firms with larger boards have lower variability of corporate performance. The author
stressed the distinction between the level of corporate performance and performance
variability. Previous research has found that final decisions of larger groups reflect
more compromises, and are therefore less extreme than decisions made by smaller
groups (see Cheng, 2008, for a summary of these studies). These less extreme decisions
result in less variable corporate performance. Cheng measures variable corporate
performance by the variability in monthly stock returns and return on assets (ROA).
His study suggests that variability of corporate performance is a new factor to consider
when evaluating corporate boards. Each of the papers in this area of research presents
different approaches, and arguments, for managing risk.

2.2 Hypothesis development

Several studies have documented the low number of women serving on corporate
boards. Joy (2008) studied the percentage of women on boards of US firms from 1995 to
2006. Her research showed that women held only 9.6 percent of Fortune 500 board
seats in 1995 and it only increased by 14.6 percent by 2006. She concluded that “at this
rate of growth, it would take at least 70 years for women to reach parity with men on
Fortune 500 boards” (p. 15). Research by Catalyst found that in 2012, women were just
16.6 percent of the directors for Fortune 500 companies and that 10.3 percent of these
firms had no female board members (Catalyst, 2012). Ross-Smith and Bridge (2008)
noticed a similar “glacial effect” regarding the progress of women in corporate
governance in Australia, and Shilton et al. (2010) reported that women are also
underrepresented on corporate boards in New Zealand.
Yet, even with the smaller numbers as board members, do women in corporate
leadership positions make a difference in how well firms perform? Some studies have
found a beneficial relationship between a gender diverse board and firm performance.
Srinidhi et al. (2011) studied gender-diverse boards in the USA using two measures
of earnings quality. They found that firms with female directors exhibited higher
earnings quality. Campbell and Minguez-vera (2008) studied Spanish companies from
1995 to 2000 and found that gender diversity had a positive effect on firm value.
Other authors used different measures to show a link between gender diversity and
corporate performance. Adler (2001) found a strong correlation between women-
friendliness and firm profitability. He studied Fortune 500 companies from 1980 to 1998
and developed a scoring system to determine “women-friendly” firms as those firms
who scored highest in employing women in the top ten executive positions, the next ten
executive positions, and the board of directors. He measured operational performance
using ROA, return on sales, and return on equity (ROE). In 2004, Catalyst examined
the connection between gender diversity and financial performance, using a sample of
MF Fortune 500 companies from 1996 to 2000. Their study found that firms in the top
40,8 quartile in terms of diversity achieved better financial performance, as measured by
ROE and raw stock returns, than their lower-quartile counterparts (Catalyst, 2004).
Carter et al. (2003) built upon the research of Robinson and Dechant (1997), who
found support for diversity in several ways. First, they reasoned that diversity promotes
better understanding of the marketplace. Second, diversity increases creativity and
790 innovation, as attitudes and beliefs tend to vary with demographic variables. Third,
diversity produces more effective problem solving, as different views are considered
when making a decision. The finding by Carter et al. (2003) was that a positive
relationship existed between board diversity and firm value, proxied by Tobin’s Q.
However, some studies have found a negative or insignificant relationship between
board gender diversity and firm performance. To refine the effects of women’s influence
on corporate governance, Adams and Ferreira (2009) studied women in the boardroom
and found that gender-diverse boards allocated more effort to monitoring. But they also
found differences in firm performance and gender diversity depending on whether the
firms have weak or strong governance, as measured by the ability of the firms to resist
being taken over. They concluded that “enforcing gender quotas could ultimately
decrease shareholder value” (p. 308). Francoeur et al. (2008) studied the 500 largest
Canadian firms and found that more women in top management resulted in firms
generating positive and significant abnormal returns, but this connection was
insignificant when studying the impact of female directors on firm performance. Rhode
and Packel (2010) provided a comprehensive review of the research on diversity and
corporate boards. They concluded that the “empirical research on the effect of board
diversity on firm performance is inconclusive, and the results are highly dependent on
methodology” (p. 8). But they still found a basis for concluding that board diversity
enhances decision making.
Several studies have theorized on and attempted to discover the mechanisms
through which a more diverse board can lead to better decision making. Recent studies
have noted that a “critical mass” of enough female directors may make a difference.
Schwartz-Ziv (2013) studied Israeli boards that are relatively gender balanced.
She found that boards with critical masses of at least three male and three female
directors were “more active and have a more diverse set of skills, and that their
companies exhibit better financial performance” in terms of ROE and net-profit-margin
(p. 5). In a report by the Conference Board of Canada (Anastasopoulos et al., 2002),
Canadian corporations were followed from 1995 to 2001. Those companies with two
or more women on the board in 1995 were far more likely to be industry leaders in
revenues and profits six years later, in 2001.
Another mechanism through which female directors could influence the decision
making of the board is through gender differences in risk propensity. Levin et al. (1988)
conducted an experimental study that indicated that women were more risk averse
than men. Jianakoplos and Bernasek (1998) found that single women exhibited
more risk aversion in financial decision making than single men. The authors’ finding
could indicate that aversion to risk could lead to lower performance of companies,
as the more risk averse investors are, the lower will be their expected returns on
investments. Byrnes et al. (1999) conducted a meta-analysis of gender differences in
risk taking. They separated the research into type of task (self-reported vs observed),
task content, and age levels. Given this framework, the authors saw three patterns
that could apply in terms of gender differences. In the first pattern, there would be a
constant gender difference across contexts favoring men. The second pattern would
consist of varying gender differences across contexts, but it would always be men Board gender
who take more risks when gender differences occur. The third pattern would be a diversity on
distribution of effects that included a full range of values – sometimes men would take
more risks, sometimes women would take more risks, or there would be no difference. firm risk
Upon compiling these studies, the results supported theories that imply that certain
people take risks in certain situations.
Schubert (2006) studied gender differences in risk attitudes and found that women 791
were more pessimistic toward gains than men. In the context of risk management,
however, women were found to have a comparative advantage with respect to
diversification and communication tasks. The author noted that these results had
implications on firm success because “a well-established cooperation of men and
women at the senior management level appears recommendable for firms which strive
for an optimization of their risk analysis and risk management” (p. 706). Thus, if
members of the board reach more compromised decisions, their actions could reduce
volatility of the firm’s performance, and consequently reduce risk.
While there is much research that indicates that women in the general population
tend to be more risk averse than men overall (see Croson and Gneezy, 2009 for a
summary of this research), there is some evidence that the same characteristic may not
hold for women in corporate leadership positions. Maxfield et al. (2010) used the
Simmons 2008 Gender and Risk database and found female managers are no more and
no less risk averse than male managers in their decision making in managerial situations.
Atkinson et al. (2003) examined female versus male fixed income mutual fund managers
and found that their funds did not differ significantly in performance or risk.
In an attempt to provide a rationale for sometimes contradictory or nonexistent
findings on the relationship between board gender diversity and firm performance,
de Luis-Carnicer et al. (2008) described two theoretical hypotheses. In their “social
identity theory,” firm performance is at its worst with a gender-balanced board. This
argument implies that having a more homogeneous board composition can lead to
better firm performance because “homogeneous groups show ease of communication
and low relational conflict that lead to greater cohesion” (p. 588). However, in the
“resource-based view of a firm,” they hypothesize that firm performance will be higher
with a gender balanced board. This view builds on the idea that more diversity leads
to better outcomes because of “different and complementary competencies to the task
of management” (p. 586).
There is much research to support the resource-based view of the firm. Apesteguia
et al. (2012) analyzed data from a strategic decision-making simulation involving
undergraduate and MBA students. They found evidence that teams of three women
were significantly outperformed by all other gender combinations and that mixed
teams showed the highest performance, suggesting that gender diversity was
positively related to good team dynamics. The research described previously by Carter
et al. (2003) and Schwartz-Ziv (2013) would also follow the resource-based view.
Further, Kramer et al. (2006) conducted interviews and focus groups of corporate board
members to determine what impact women have on boards. Their study participants
were 50 women who sit on one or more boards of Fortune 1000 companies, 12 CEOs,
seven corporate secretaries of Fortune 1000 companies, and two female executives
from firms who search for board members. The conclusion of their study states that:

Women ask tough questions that men are less likely to ask, forcing management to articulate
the logic behind their proposals more fully, and allowing for superior board decisions [y].
MF The results of the study show that even one woman can make a positive contribution, that
having two women is generally an improvement, but that corporations with three or more
40,8 women on their boards tend to benefit most from women’s contributions. Three women
normalizes women directors’ presence, allowing women to speak and contribute more freely
and men to listen with more open minds.
We develop our hypothesis from the “resource-based view of the firm” described by de
792 Luis-Carnicer et al. (2008). Then, using Cheng’s (2008) model, we analyze firm risk
as measured by variability of corporate performance. Our main measure of variability
is the standard deviation of the firm’s monthly stock returns. As the presence of
reported volatility increases costs of accessing external capital (Minton and Schrand,
1999), we would expect that leaders would manage risk by presenting smooth financial
statements. We propose that a gender diverse board would be more likely to achieve
lower variability of corporate performance. Our first hypothesis is:

H1. Increasing gender diversity on the board of directors will decrease the variability
of corporate performance.

To understand how gender and board size interact, we wish to capture any additional
effect of a larger board that is diverse. In our second hypothesis, we propose that the
interaction between females on the board and board size would be more likely to
achieve lower variability of corporate performance:

H2. The interaction of women and board size will decrease the variability of corporate
performance.

3. Research methodology
3.1 Sample selection
Our sample consists of companies from the RiskMetrics database from 2007 to 2011.
This database contains information on corporate boards of directors. Financial
variables were collected from the Compustat database and CRSP database for the years
2005-2011. We used multiple years of financial information in order to have a more
accurate measure of financial performance. As shown in Table I, we excluded companies
whose financial statement information was incomplete or unavailable on Compustat or
CRSP. We also excluded firms in the utility industry (SIC codes between 4900 and 4999)
and the financial industry (SIC codes between 6000 and 6099), because they are highly
regulated industries and firms in those industries have different financial statement
formats. We also excluded industry segments where the number of observations was
o15. Our final sample consists of 5,754 firm-year observations.

Sample building process No. of obs

After merging RiskMetrics, Compustat, and CRSP 7,056

Less
Observations with financial variables missing 594
Table I. SIC code between 4900-4999 and 6000-6099 634
Sample selection Industry segments with number of observations is o15 74
description Final sample size 5,754
3.2 Model Board gender
Our dependent variable, SD_RETi,t, is the standard deviation of monthly stock return diversity on
in each year. This variable measures the volatility of stock return, which we use as a
proxy for firm risk. We also perform additional testing where we use various measures firm risk
as proxies for firm risk, including an idiosyncratic risk measure, standard deviation
of daily stock return, and standard deviation of market-adjusted stock return. Our test
variables measure the effect of diversity on the variability of corporate performance. 793
We measure diversity in one of two ways. Our first variable, PCT_F_DIR, measures
the percentage of female directors. Our second method of measuring the effect of
diversity is to combine a GENDER variable, represented by a 1 if a board has female
director(s) and 0 otherwise, with an interaction term between gender and board size
(BRD_SIZE  GENDER). This leads to our basic model, represented as follows:
Dependent Variable;t ¼ a þ b1 MK VALTi;t þ b2 ROAi;t þ b3 DEBTi;t þ b4 S GROWTHi;t
þ b5 CAP EXPi;t þ b6 LOSSi;t þ b7 BRD SIZEi;t þ b8 BUS CLXi;t
þ b9 Female Director Variablei;t þ b10 CEO CHAIRi;t
ð1Þ
In determining our control variables, we consider the determinants of firm valuation.
Firm value is estimated by the present value of future cash flows, as follows
(Titman and Martin, 2008):
X
n
CFi
PV ¼ ð2Þ
i¼1 ð1 þ rÞi

In the above equation, in addition to the timing of cash flows, firm value is determined
by two factors – a risk indicator, r, and the amount of cash flows, CF. While our major
interest is to investigate the impact of women directors on firm risk, the denominator
part of the firm valuation equation, we also examine the numerator effect by
controlling for firm characteristics using control variables because the amount of cash
flows relies on such factors as debt, growth and investment opportunities.
We include the following independent variables in our model. Market valuation
(MK_VALT) is the log of the market value of equity, a proxy for firm size. Bigger, older,
and more diversified firms are likely to observe less variable performance (Cheng,
2008). We also control for firm performance, as measured by ROA, level of debt
(DEBT), sales growth (S_GROWTH), capital expenditures as a portion of total assets
(CAP_EXP), and whether the firm has experienced a loss (LOSS). We would expect
firms with lower profitability, as measured both by ROA and whether there is a loss in
the current year (LOSS), to have higher performance variability. We would also expect
firms with a higher level of debt (DEBT), faster sales growth (S_GROWTH) and capital
expenditures (CAP_EXP) to experience higher performance variability. The cost of
accessing internal capital for investment is higher when there is higher performance
variability (Minton and Schrand, 1999).
Following Cheng (2008), we examine whether the board size is an indicator of
performance variability. Our variable, BRD_SIZE, is the log of the number of board
members. Wang (2012) found that small boards give CEOs larger incentives and force
them to bear more risk than larger boards. So a smaller board would imply more
volatility or variability. Then, as mentioned above, a more diversified firm is likely to
observe less variable performance. We measure diversification as business complexity
MF (BUS_CLX), which is a dummy variable reflected as a 1 if the earnings foreign
40,8 currency translation rate is reported in Compustat, 0 otherwise. This variable follows
the procedure suggested by Ge and McVay (2005). Further, we expect someone who
is both CEO and Chairman of the Board (CEO_CHAIR) to exercise more power in
decision making. According to Cheng (2008), when CEOs become more powerful, firm
performance may become more variable or less variable. Cheng uses this variable in
794 order to distinguish agency problems of a powerful CEO from board size.
We run cross-sectional time series panel regressions to test our model. To capture
the time invariant feature for individual firms, we control for fixed effects using a
year dummy. We also include an industrial dummy variable using the two-digit SIC
code to control for a potential endogeneity issue, which could result from firms
in certain industries choosing more female directors. We run the White (1980) test
for heteroskedasticity[1]. The F-statistic suggests that the null hypothesis of constant
variance of error terms is rejected, indicating that heteroskedasticity exists. To correct
for heteroskedasticity, we run regressions using robust standard errors in all models
(Wooldridge, 2003).

4. Results
4.1 Descriptive data
Table II shows the descriptive statistics on board structure for our sample of 5,754
firm-year observations. The minimum size of a board is four directors, while the
maximum is 34 directors, with a mean and median of nine directors. Women comprise
anywhere from zero to seven directors. In terms of percentages, that represents a mean
of slightly more than 11 percent women. The maximum percentage of women on the
board of directors in our sample is 62.5 percent. The percentage of all-male boards in
our sample ranges from 32.6 percent in 2007 to 28.4 percent in 2011. This is in contrast
to the findings by Catalyst (2012) that in year 2012 only 10.3 percent of Fortune 500
firms had no female board members.

Mean SD Min Median Max No. of obs

Panel A
No. of directors 9.128 2.240 4.000 9.000 34 5,754
No. of female directors 1.136 1.022 0.000 1.000 7 5,754
Pct. of female directors 0.117 0.100 0.000 0.111 0.625 5,754
Panel B
MK_CAP 8,675.797 25,796.340 30.276 2,021.581 504,239.6 5,754
ROA 0.046 0.109 1.770 0.053 0.560 5,754
DEBT 0.187 0.167 0.000 0.169 1.511 5,754
S_GROWTH 0.081 0.282 0.807 0.067 9.321 5,754
CAP_EXP 0.048 0.053 0.000 0.032 0.496 5,754
SALES 7,430.169 22,694.900 2.960 1,762.483 433,526 5,754
AT 10,042.450 36,000.070 54.451 2,149.853 799,625 5,754
Panel C
SD_RET 0.113 0.061 0.010 0.100 0.842 5,754
IDI_RISK 0.023 0.010 0.007 0.021 0.117 5,754
SD_ROA 0.055 0.085 0.001 0.031 1.964 5,754
SD_CF 0.055 0.088 0.000 0.031 1.970 5,610
Table II. SD_Q 0.346 0.360 0.001 0.242 3.510 5,585
Descriptive statistics
of board variables Note: MK_CAP, sales, and total assets (AT) are in millions ($)
Panel B of Table II shows the descriptive statistics for our other independent variables Board gender
for all firm years. The average ROA for our sample firms is 4.6 percent. The market diversity on
capitalization averages $8.6 billion. Firms have a relatively low percentage of debt on
average, at about 19 percent. Capital expenditures represent 4.8 percent, and average firm risk
sales growth is about 8 percent. Average total sales are $7.4 billion, and total assets
average $10.1 billion.
Panel C of Table II shows the descriptive statistics for our dependent variables. 795
The mean value of the standard deviation of stock return is 11.3 percent. The average
measure of idiosyncratic risk, which represents the standard deviation of residuals
from the single-index market model (Anderson and Fraser, 2000) is 2.3 percent.
The average standard deviation of ROA is 5.5 percent, the average standard deviation
of cash flow is 5.5 percent, and the average value for the standard deviation of Tobin’s
Q in our sample is 34.6 percent.
Table III shows the distribution of firms in our sample. The business services
industry (two-digit SIC code 73; 574 firms, or 9.98 percent of the sample) comprise
the highest frequency of sample firms, followed by electronic equipment (two-digit SIC
code 36; 484 firms, or 8.41 percent of the sample) and chemicals (two-digit SIC code 28;
441 firms, or 7.66 percent of the sample). There are also a high number of firms from
the machinery and equipment sector (two-digit SIC code 35; 397 firms, or 6.9 percent of
the sample) and the electric, gas, and sanitary services sector (two-digit SIC code 49;
382 firms, or 6.64 percent of the sample).

4.2 Regression results

Table IV shows the results of our model. In column 1, we test the model using the
independent variable percentage of female directors (PCT_F_DIR) for our first
hypothesis. In column 2, we test the same model but instead of the percent of female
directors variable, we use the binary gender variable if a board has women on it
(GENDER) and the interaction term of gender and board size (BRD_SIZE  GENDER)
for our second hypothesis. We find in both columns that market valuation (MK_VALT ),
ROA, board size (BRD_SIZE ), and CEO_CHAIR are negatively and significantly related
to stock market return. This finding indicates that smaller firms with lower ROA have
higher variability of corporate performance. Further, our results are consistent with
Cheng (2008) in that a larger board of directors, and a more powerful CEO, as represented
by a CEO who is also the Chairman of the Board, led to less variable corporate
performance. The positive and significant coefficients for sales growth (S_GROWTH)
and capital investment (CAP_EXP) indicate that these conditions of growth can lead to
performance variability, as does a LOSS[2].
Our two hypotheses are supported by our regression results. The negative and
significant coefficient of the percentage of female directors (PCT_F_DIR) shows that
there is an inverse relationship between the percent of women directors and the variability
of corporate performance. A one standard deviation change in the percent of female
directors is ten percentage points. Table IV shows that the coefficient of PCT_F_DIR is
0.015, indicating that every one standard deviation increase in PCT_F_DIR will reduce
the variability of stock return by 0.15 percent, which represents a 1.33 percent decline
from the mean. This effect on the dependent variable is five times larger than the effect
of having a CEO_CHAIR, given the 0.003 coefficient of the CEO_CHAIR variable. These
results are consistent when we test our model in column 2. The interaction of having
women directors and a larger board also leads to a lower variability of stock market
return. Thus, Cheng’s (2008) finding that larger boards are associated with lower
MF Industry Two-digit SIC codes Freq. Percent
40,8
Metal mining 10 22 0.38
Coal mining 12 21 0.36
Oil and gas 13 218 3.79
Nonmetallic minerals 14 24 0.42
General building 15 52 0.9
796 Heavy construction 16 28 0.49
Special trade 17 16 0.28
Food products 20 180 3.13
Tobacco products 21 16 0.28
Apparel 23 68 1.18
Lumber and wood 24 34 0.59
Furniture 25 43 0.75
Paper products 26 86 1.49
Printing and publishing 27 50 0.87
Chemicals 28 441 7.66
Petroleum and coal 29 59 1.03
Rubber and plastics 30 50 0.87
Leather 31 35 0.61
Stone, clay, and glass products 32 19 0.33
Primary metal 33 88 1.53
Fabricated metal 34 96 1.67
Machinery and equipment 35 397 6.9
Electronic equipment 36 484 8.41
Transportation equipment 37 149 2.59
Instruments products 38 357 6.2
Misc. manufacturing 39 59 1.03
Railroad transportation 40 19 0.33
Trucking and warehousing 42 52 0.9
Water transportation 44 23 0.4
Transportation by air 45 39 0.68
Transportation services 47 31 0.54
Communications 48 131 2.28
Electric, gas and sanitary services 49 382 6.64
Wholesale trade-durables 50 154 2.68
Wholesale trade-nondurables 51 66 1.15
Building materials and gardening 52 21 0.36
General merchandise stores 53 61 1.06
Food stores 54 19 0.33
Automotive dealers 55 49 0.85
Apparel and accessory stores 56 101 1.76
Furniture stores 57 26 0.45
Eating and drinking places 58 117 2.03
Miscellaneous retail 59 105 1.82
Security and commodity brokers 62 56 0.97
Insurance carriers 63 118 2.05
Insurance agents. Brokers and service 64 34 0.59
Holding and other investments 67 167 2.9
Hotels and other lodging places 70 15 0.26
Business services 73 574 9.98
Amusement and recreation 79 31 0.54
Health services 80 128 2.22
Educational services 82 38 0.66
Table III. Engineering and Management services 87 90 1.56
Distribution of Services, NEC 99 15 0.26
sample firms Total 5,754 100
 SD_RET SD_RET
Board gender
diversity on
MK_VALT 0.000*** 0.000*** firm risk
ROA 0.074*** 0.073***
DEBT 0.021*** 0.022***
S_GROWTH 0.011*** 0.010***
CAP_EXP 0.028* 0.028* 797
LOSS 0.029*** 0.029***
BRD_SIZE 0.025*** 0.014**
BUS_CLX 0.001 0.001
PCT_F_DIR 0.015*
CEO_CHAIR 0.003*** 0.003***
GENDER 0.018
BRD_SIZE  GENDER 0.012*
Constant 0.154*** 0.132***
Industry dummy Yes Yes
Year dummy Yes Yes
Adjusted R2 0.388 0.389
n 5,754 5,754
Notes: Dependent Variable,t ¼ a þ b1MK_VALTi,t þ b2ROAi,t þ b3 DEBTi,t þ b4S_GROWTHi,t þ
b 5CAP_EXP i,t þ b 6 LOSSi,t þ b7 BRD_SIZE i,t þ b 8BUS_CLXi,t þ b9Female Director Variablei,t þ
b10CEO_CHAIRi,t. Dependent Variable, standard deviation of monthly stock return (SD_RET);
MK_VALT, market value of equity; ROA, return on assets; DEBT, level of debt; S_GROWTH, sales
growth; CAP_EXP, capital expenditures as a proportion of total assets; LOSS, 1 if the firm experienced
a loss, 0 otherwise; BRD_SIZE, log of the number of board members; BUS_CLX, business complexity,
reflected by a 1 if foreign currency translation rate is reported, 0 otherwise; CEO_CHAIR, 1 if someone Table IV.
is the CEO and Chairman of the Board, 0 otherwise. For female director variables: PCT_F_DIR, Regression results for
percentage of female directors; GENDER, 1 if a board has female director(s), 0 otherwise; BRD_ models measuring
SIZE  GENDER is an interaction term between BRD_SIZE and GENDER. *,**,***Significant at variability of corporate
10, 5, and 1 percent, respectively performance

variability of corporate performance is strengthened when there are women represented

on the board. Because of the relationship to the other variables in our model, these results
are both statistically and economically significant.

4.3 Additional analysis

We then performed robustness testing of our major results through a series of
sensitivity analyses. First, we illustrate what happens when we examine idiosyncratic
risk as the dependent variable in our model. We generate the measure for idiosyncratic
risk through two stages. In the first stage, we obtain residuals of firm performance
from OLS regressions. To obtain the residuals of monthly stock returns, we run a
single-index market model for each firm, following Anderson and Fraser (2000):

Ri ¼ ai þ bi bm þ ei ð3Þ

where Rm is the stock market return using an equally weighted market index.
In the second stage, we use the standard deviation of residuals from model (3) as the
dependent variable and re-run our model (1). Using residuals from model (3) also
extracts other risk factors from the total risk measure and therefore generates an
individual risk measure. As standard deviation of stock return Rt represents the total
MF risk and bi is systematic risk in model (3), the standard deviation of residuals from
40,8 model (3) measures idiosyncratic risk (IDI_RISK). Because firm executives have
influences on firm-specific risk only, using the idiosyncratic risk measure in model (1)
provides a more accurate justification of the relationship between women directors
and firm risk.
The first column of Table V reports results of the second-stage regression, with
798 IDI_RISK as the dependent variable. The result is consistent with our previous
analysis, revealing that the percentage of women directors is negatively associated
with variability of firm performance.
We then choose alternative dependent variables to evaluate our results. Our first set
of dependent variables includes the standard deviation of operating cash flows, ROA,
and Tobin’s Q. We choose the standard deviation of operating cash flows as another
dependent variable that proxies for firm risk. Allayannis and Weston (2003) and
Rountree et al. (2008) found that cash flow variability is negatively valued by investors,
and may reduce firm value. We also examine ROA and Tobin’s Q, which are measures
of firm performance. For consistency, we employ the standard deviations of ROA and
Tobin’s Q to measure firm risk. The results in Table V show that the association between
women directors and firm risk remains consistent when using these alternative
dependent variables. Specifically, each one standard deviation increase in the percent of
women directors (PCT_F_DIR) is associated with a decrease of 0.24 percent, 0.18 percent,
or 1.24 percent of standard deviation of cash flows, ROA, or Tobin’s Q, respectively.

IDI_RISK SD_CF SD_ROA SD_Q SD_RET_DY SD_MKT_ADJ_RET

MK_VALT 0.000*** 0.000* 0.000 0.000*** 0.000*** 0.000***

ROA 0.015*** 0.250*** 0.269*** 0.370** 0.017*** 0.074***
DEBT 0.001 0.020*** 0.019*** 0.349*** 0.002* 0.021***
S_GROWTH 0.003*** 0.007 0.005 0.127*** 0.002** 0.011***
CAP_EXP 0.008*** 0.014 0.013 0.936*** 0.010*** 0.028*
LOSS 0.005*** 0.009 0.012* 0.058** 0.006*** 0.029***
BRD_SIZE 0.007*** 0.014*** 0.018*** 0.154*** 0.007*** 0.025***
BUS_CLX 0.000** 0.001 0.002 0.015 0.000 0.001
PCT_F_DIR 0.003** 0.024** 0.018* 0.124** 0.004*** 0.015*
CEO_CHAIR 0.001*** 0.005*** 0.005*** 0.016*** 0.001*** 0.003***
Constant 0.039*** 0.140*** 0.162*** 0.707*** 0.043*** 0.125***
Industry dummy Yes Yes Yes Yes Yes Yes
Year dummy Yes Yes Yes Yes Yes Yes
Adjusted R2 0.535 0.254 0.275 0.230 0.591 0.308
n 5,754 5,446 5,585 5,585 5,754 5,754

Notes: Dependent Variable,t ¼ a þ b1 MK_VALTi,t þ b 2ROAi,t þ b 3 DEBT i,t þ b 4 S_GROWTH i,t þ b 5 CAP_
EXP i,t þ b 6LOSS i,t þ b 7BRD_SIZEi,t þ b 8 BUS_CLXi,t þ b 9 Female Director Variable i,t þ b 10 CEO_CHAIRi,t .
Dependent Variable: IDI_RISK, idiosyncratic risk measure, the standard deviation of the error terms of total
risk; SD_CF, standard deviation of operation cash flows; SD_ROA, standard deviation of return on equity; SD_Q,
standard deviation of Tobin’s Q; SD_RET_DY, standard deviation of daily stock return; SD_MKT_ADJ_RET,
standard deviation of monthly market-adjusted stock return; MK_VALT, market value of equity; ROA, return on
assets; DEBT, level of debt; S_GROWTH, sales growth; CAP_EXP, capital expenditures as a proportion of total
Table V. assets; LOSS, 1 if the firm experienced a loss, 0 otherwise; BRD_SIZE, log of the number of board members;
Regression results BUS_CLX, business complexity, reflected by a 1 if foreign currency translation rate is reported, 0 otherwise;
using alternate PCT_F_DIR, percentage of female directors; CEO_CHAIR, 1 if someone is the CEO and Chairman of the Board, 0
measures of firm risk otherwise. *,**,***Significant at 10, 5, and 1 percent, respectively
Second, using the standard deviation of daily stock returns (SD_RET_DY) as a risk Board gender
measure, we re-run model (1). By sampling the stock return in a shorter time interval, diversity on
we measure the risk more accurately (French et al., 1987). As shown in Table V, the
coefficient of (PCT_F_DIR) is negative and highly significant, indicating that the firm risk
relationship between women directors and firm risk still holds.
Third, considering that the stock return is determined by many market factors, in
addition to firm-specific factors such as operation efficiency, management effectiveness, 799
and corporate governance quality, we also calculate the market-adjusted return for each
firm by subtracting the monthly S&P 500 index return from firm return so as to remove
the impact of market factors on firm performance variability. Then we use the standard
deviation of market-adjusted return, SD_MKT_ADJ_RETi,t, as the dependent variable
and re-estimate model (1). Results in Table V are consistent with our major results
in Table IV.
The remaining topic we consider is the issue of endogeneity. While the impact of
women directors on firm risk is the primary interest of this paper and our results show
a causal relationship from the presence of women directors to firm risk, we recognize
that the reverse causation is likely to exist, meaning that corporate board structure
is an endogenous mechanism. The possibility that firms with lower variability in
performance choose more women directors intentionally cannot be excluded without
further examination. To address this endogeneity issue, we replace a firm’s yearly
women director characteristic in model (1) by the first valid observation of the
women-director variable during the sample period, as Cheng (2008) does. We generate
a new independent variable, FIRST_YR_F_DIR, to measure the first year’s percentage
of women directors in a firm, then re-run model (1). In this way, we investigate
firm risk over subsequent years during the sample period using the first-year
women director features. This method should mitigate the endogenous problem in our
tests. We implement the endogenous tests using various risk measures, including
standard deviation of monthly stock return (SD_RET), the idiosyncratic risk measure
(IDI_RISK), standard deviation of ROA (SD_ROA), standard deviation of Tobin’s Q
(SD_Q), and standard deviation of cash flows (SD_CF). The results in Table VI show that
the coefficients on the first valid value of women directors are negative and highly
significant in all regressions. These results suggest that the causal relationship between
women directors and firm risk is from board structure to firm performance variability.

5. Conclusion
This paper examines the relationship between the percentage of women on the board of
directors and risk, as measured by variability of stock market return. Our work supports
the work of Cheng (2008), by showing that a larger board of directors will have less
variable corporate performance. We have also shown that gender diversity of the
board makes a difference. A higher percentage of women on the board of directors is
associated with lower variability of stock market return. Our results further support the
resource-based theory of de Luis-Carnicer et al. (2008) in that a larger board that is more
diverse is associated with the better outcome of lower variability of corporate performance.
Our results support the research of Rountree et al. (2008), who indicate that the
smoothness of the financial statements impact the value of the firm and the risk
management activities of the firm. It should be noted that our sample covers the time
period of the global financial crisis (GFC). The point may be raised that gender diversity
plays a secondary role to general economic stability. While our model includes a dummy
variable to control for each firm year, stock return variability may reflect firms’ responses
MF SD_RET IDI_RISK SD_CF SD_ROA SD_Q
40,8
MK_VALT 0.000*** 0.000*** 0.000*** 0.000** 0.000***
ROA 0.099*** 0.089*** 0.180*** 0.222*** 0.368**
DEBT 0.022*** 0.024*** 0.002 0.019*** 0.343***
S_GROWTH 0.008** 0.002 0.009** 0.013** 0.098***
800 CAP_EXP 0.001 0.024 0.004 0.016 0.883***
LOSS 0.034*** 0.031*** 0.011** 0.019*** 0.063**
BRD_SIZE 0.023*** 0.026*** 0.011** 0.015*** 0.177***
BUS_CLX 0.008*** 0.003** 0.001 0.000 0.023**
FIRST_YR_F_DIR 0.020** 0.017** 0.051*** 0.037*** 0.148***
CEO_CHAIR 0.002** 0.001 0.004*** 0.005*** 0.017***
Constant 0.193*** 0.141*** 0.137*** 0.151*** 0.808***
Industry dummy Yes Yes Yes Yes Yes
Adjusted R2 0.283 0.293 0.384 0.269 0.227
n 4,743 4,743 4,713 4,743 4,691

Notes: Dependent Variable,t ¼ a þ b1MK_VALTi,t þ b2ROAi,t þ b3DEBTi,t þ b4S_GROWTHi,t þ b5CAP_EXPi,t þ

b6LOSSi,t þ b7BRD_SIZEi,t þ b8BUS_CLXi,t þ b9FIRST_YR_F_DIR þ b10CEO_CHAIRi,t. Dependent Variable:
SD_RET, standard deviation of stock return; IDI_RISK, idiosyncratic risk measure, the standard deviation of
the error terms of total risk; SD_CF, standard deviation of operation cash flows; SD_ROA, standard deviation of
return on equity; SD_Q, standard deviation of Tobin’s Q; MK_VALT, market value of equity; ROA, return on assets;
DEBT, level of debt; S_GROWTH, sales growth; CAP_EXP, capital expenditures as a proportion of total assets;
LOSS, 1 if the firm experienced a loss, 0 otherwise; BRD_SIZE, log of the number of board members; BUS_CLX,
business complexity, reflected by a 1 if foreign currency translation rate is reported, 0 otherwise; CEO_CHAIR, 1 if
Table VI. someone is the CEO and Chairman of the Board, 0 otherwise; FIRST_YR_F_DIR, percentage of female directors in
Endogeneity tests the first year of sample period. *,**,***Significant at 10, 5, and 1 percent, respectively

to the GFC. We acknowledge this limitation, and suggest that as more data becomes
available for years following the GFC, more research can be done on this issue.
Our paper contributes to the body of literature that examines the impact of women
in the boardroom. We provide further evidence that gender-based differences in the
governance of firms have important implications regarding corporate performance, the
management of risk, and the value of the firm. Therefore, it would be worth a firm’s
efforts to intentionally seek women to serve on their boards and to become involved
with organizations that help women prepare for and attain directorships.
Notes
1. White (1980) notes that the presence of heteroskedasticity in an otherwise properly specified
linear model leads to inconsistent covariance matrix estimates, resulting in faulty inferences
being drawn.
2. As a robustness check, we replace the size variable MK_VALT with log of total assets. The
outcome of our regression is not qualitatively changed.

References
Adams, R.B. and Ferreira, D. (2009), “Women in the boardroom and their impact on governance
and performance”, Journal of Financial Economics, Vol. 94 No. 2, pp. 291-309.
Adler, R.D. (2001), “Women in the executive suite correlate to high profits”, Glass Ceiling
Research Center, available at: www.w2t.se/se/filer/adler_web.pdf (accessed May 1, 2013).
Allayannis, G. and Weston, J.P. (2001), “The use of foreign currency derivatives and firm market
value”, The Review of Financial Studies, Vol. 14 No. 1, pp. 243-276.
Allayannis, G. and Weston, J.P. (2003), “Earnings volatility, cash flow volatility, and firm value”, Board gender
working paper, University of Virginia, Charlottesville, VA and Rice University,
Houston, TX. diversity on
Anastasopoulos, V., Brown, D.A.H. and Brown, D.L. (2002), “Women on boards: not just the right firm risk
thing, but the ‘bright’ thing”, The Conference Board of Canada, available at: www.
conferenceboard.ca/e-library/abstract.aspx?did¼374 (accessed April 5, 2013).
Anderson, R. and Fraser, D.R. (2000), “Corporate control, bank risk taking, and the health of the 801
banking industry”, Journal of Banking & Finance, Vol. 24 No. 8, pp. 1383-1398.
Apesteguia, J., Azmat, G. and Iriberri, N. (2012), “The impact of gender composition on team
performance and decision making: evidence from the field”, Management Science, Vol. 58
No. 1, pp. 78-93.
Association of Certified Fraud Examiners (2013), US Fraud Examiners Manual, Association of
Certified Fraud Examiners, Austin, TX.
Atkinson, S., Baird, S. and Frye, M. (2003), “Do female mutual fund managers manage
differently?”, The Journal of Financial Research, Vol. XXVI No. 1, pp. 1-18.
Bhagat, S. and Bolton, B. (2008), “Corporate governance and firm performance”, Journal of
Corporate Finance, Vol. 14 No. 3, pp. 257-273.
Byrnes, J.P., Miller, D.C. and Schafer, W.D. (1999), “Gender differences in risk taking: a meta-
analysis”, Psychological Bulletin, Vol. 125 No. 3, pp. 367-383.
Campbell, K. and Minguez-vera, A. (2008), “Gender diversity in the boardroom and firm financial
performance”, Journal of Business Ethics, Vol. 83 No. 3, pp. 435-451.
Carter, D.A., Simkins, B.J. and Simpson, W.G. (2003), “Corporate governance, board diversity, and
firm value”, The Financial Review, Vol. 38 No. 1, pp. 33-53.
Catalyst (2004), The Bottom Line: Connecting Corporate Performance and Gender Diversity,
Catalyst Publication Code D58, New York, NY, pp. 1-28.
Catalyst (2012), 2012 Catalyst Census: Women Board Directors, Catalyst, New York, NY.
Cheng, S. (2008), “Board size and the variability of corporate performance”, Journal of Financial
Economics, Vol. 87 No. 1, pp. 157-176.
Croson, R. and Gneezy, U. (2009), “Gender differences in preferences”, Journal of Economic
Literature, Vol. 47 No. 2, pp. 448-474.
de Luis-Carnicer, P., Martinez-Sanchez, A., Perez-Perez, M and Vela-Jimenez, M.J. (2008), “Gender
diversity in management: curvilinear relationships to reconcile findings”, Gender in
Management: An International Journal, Vol. 23 No. 8, pp. 583-597.
Financial Industry Regulatory Authority (2013), “Smart investing”, available at: www.finra.org/
investors/smartinvesting/advancedinvesting/managinginvestmentrisk (accessed April 1,
2013).
Francoeur, C., Labelle, R. and Sinclair-Desgagne, B. (2008), “Gender diversity in corporate
governance and top management”, Journal of Business Ethics, Vol. 81 No. 1, pp. 83-95.
French, K.R., Schwert, G.W. and Stambaugh, R.F. (1987), “Expected stock returns and volatility”,
Journal of Financial Economics, Vol. 19 No. 1, pp. 3-29.
Ge, W. and McVay, S. (2005), “The disclosure of material weaknesses in internal control after the
Sarbanes-Oxley act”, Accounting Horizons, Vol. 19 No. 3, pp. 137-158.
Geczy, C., Minton, B. and Schrand, C. (1997), “Why do firms use currency derivatives?”, Journal
of Finance, Vol. 52 No. 4, pp. 1324-1354.
Gompers, P.A., Ishii, J.L. and Metrick, A. (2003), “Corporate governance and equity prices”,
Quarterly Journal of Economics, Vol. 118 No. 1, pp. 107-155.
Haushalter, D. (2000), “Financing policy, basis risk, and corporate hedging: evidence from oil and
gas producers”, Journal of Finance, Vol. 55 No. 1, pp. 107-152.
MF Jianakoplos, N. and Bernasek, A. (1998), “Are women more risk averse?”, Economic Inquiry,
Vol. 36 No. 4, pp. 620-630.
40,8
Joy, L. (2008), “Women board directors in the United States: an eleven year retrospective”, in
Vinnicombe, S., Singh, V., Burke, R.J., Bilmoria, D. and Huse, M. (Eds), Women on
Corporate Board of Directors: International Research and Practice, Edward Elgar
Publishers, Cheltenham, pp. 15-23.
802 Klein, A. (2002), “Audit committee, board of director characteristics, and earnings management”,
Journal of Accounting and Economics, Vol. 33 No. 3, pp. 375-400.
Kramer, V., Konrad, A. and Erkut, S. (2006), “Critical mass on corporate boards: why three or
more women enhance governance”, Report No. WCW 11, Wellesley Centers for Women,
Wellesley, MA.
Levin, I., Snyder, M. and Chapman, D. (1988), “The interaction of experimental and situational
factors and gender in a simulated risky decision-making task”, Journal of Psychology,
Vol. 122 No. 2, pp. 173-181.
Li, X. and Wu, Z. (2009), “Corporate risk management and investment decisions”, The Journal of
Risk Finance, Vol. 10 No. 2, pp. 155-168.
Lin-Hi, N. and Blumberg, I. (2011), “The relationship between corporate governance, global
governance, and sustainable profits: lessons learned from BP”, Corporate Governance,
Vol. 11 No. 5, pp. 571-584.
Maxfield, S., Shapiro, M., Gupta, V. and Hass, S. (2010), “Gender and risk: women, risk taking and
risk aversion”, Gender in Management: An International Journal, Vol. 25 No. 7, pp. 586-604.
Minton, B. and Schrand, C. (1999), “The impact of cash flow volatility on discretionary
investment and the costs of debt and equity financing”, Journal of Financial Economics,
Vol. 54 No. 3, pp. 423-460.
Robinson, G. and Dechant, K. (1997), “Building a business case for diversity”, Academy of
Management Executive, Vol. 11 No. 3, pp. 21-30.
Ross-Smith, A. and Bridge, J. (2008), “Glacial at best’: women’s progress on corporate boards
in Australia”, in Vinnicombe, S., Singh, V., Burke, R.J., Bilmoria, D. and Huse, M. (Eds),
Women on Corporate Board of Directors: International Research and Practice, Edward
Elgar Publishers, Cheltenham, pp. 67-78.
Rountree, B., Weston, J.P. and Allayannis, G. (2008), “Do investors value smooth performance?”,
Journal of Financial Economics, Vol. 90 No. 3, pp. 237-251.
Rhode, D.L. and Packel, A.K. (2010), “Diversity on corporate boards: How much difference does
difference make?”, working paper, Rock Center for Corporate Governance, Stanford, CA.
Schubert, R. (2006), “Analyzing and managing risks – on the importance of gender difference in
risk attitudes”, Managerial Finance, Vol. 32 No. 9, pp. 706-715.
Schwartz-Ziv, M. (2013), “Does the gender of directors matter?”, SSRN working paper series,
Edmond J. Safra Center for Ethics, Harvard University, available at: http://ssrn.com/
abstract¼1868033 (accessed April 1, 2013).
Shilton, J., McGregor, J. and Tremaine, M. (2010), “Feminizing the boardroom: a study of the
effects of corporatization on the number and status of women directors in New Zealand
companies”, Gender in Management: An International Journal, Vol. 25 No. 4, pp. 275-284.
Srinidhi, B., Gul, F.A. and Tsui, J. (2011), “Female directors and earnings quality”, Contemporary
Accounting Research, Vol. 28 No. 5, pp. 1610-1644.
Titman, S. and Martin, J.D. (2008), Valuation: The Art & Science of Corporate Investment
Decisions, Pearson Education Inc., Boston, MA.
Wang, C-J. (2012), “Board size and firm risk-taking”, Review of Quantitative Finance and
Accounting, Vol. 38 No. 4, pp. 519-542.
White, H. (1980), “A heteroskedasticity-consistent covariance matrix estimator and a direct test Board gender
for heteroskedasticity”, Econometrica, Vol. 48 No. 4, pp. 817-839.
diversity on
Wooldridge, J.M. (2003), Introductory Econometrics, A Modern Approach, 2nd ed., MIT Press,
Cambridge, MA. firm risk
Zahra, S.A. and Pearce, J.A. II (1989), “Boards of directors and corporate financial performance:
a review and integrative model”, Journal of Management, Vol. 15 No. 2, pp. 291-334.
803
Corresponding author
Dr Mary Jane Lenard can be contacted at: lenardmj@meredith.edu

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints