Women at High Corporate Positions: Does Gender Matter?

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Table of Contents

Overview
Description of the Research Problem
Research Methodology
Data and Research Conclusions
Contributions to the Literature
Critique of the Article
References

Overview

The recent advances in gender equality sparked discussions about whether increased presence of women at high corporate positions has any effect on a firm’s financial success. The article, Does Gender Matter? Female Representation on Corporate Boards and Firm Financial Performance – a Meta-Analysis, by Pletzer, Nikolova, Kedzior, and Voelpel (2015) seeks to address the issue of a company’s financial performance in relation to the female representation in the top management (p. 1).

Researchers evaluate current evidence on the women’s participation in the boards of directors to examine the association between these numbers and the company’s performance using a new methodological approach. In addition, these professionals include their own recommendations based on the data available.

Description of the Research Problem

Even though the tendency toward improving women’s presence in the managerial positions exists, gender parity is still under reach for most corporations and public institutions (Quarterly, 2015). For example, it was found that only one-fifth of board seats at US stock index companies were held by women in 2014 (2014 Catalyst Census: Women Board Directors, 2015). It is well-recognized that increasing gender diversity is necessary for ethical reasons; however, scientific studies that deal with the relation of women’s share of board seats and a company’s financial performance often provide conflicting evidence which creates ambiguity (Pletzer, et al., 2015, p. 1).

Pletzer and his colleagues aim to analyze the available data and use it to resolve this ambiguity. Specifically, the researchers gather and evaluate current evidence on positive and negative effects of female representation on a board of directors, and conduct a literature search to determine whether there is a statistically measurable difference in financial performance between firms with different percentage of women on the boards of directors or not. The meta-analysis has no external funding (Pletzer, et al., 2016, p. 1).

Research Methodology

The article under discussion consists of such elements:

Abstract;
Introduction;
Methods;
Results;
Discussion;
Conclusion;

The abstract is clear and concise; it provides a quick overview of the content of the article. The introduction to the meta-analysis reveals some background information and includes the thesis statement. In the “Methods” section, the researchers specify the study design, data collection, and assessment strategies. In addition, it includes the definition of variables related to the study.

The researchers gather evidence, following such process: they search EBSCO database for English-language academic studies with a quantitative design which contain relevant search terms (such as “gender diversity” or “woman diversity”) and were published between 1986 and March 2014 (Pletzer, et al., 2016, p. 5).

In addition, Pletzer and his team perform a hand-search in the “Works Cited” section and a separate search on Google Scholar. Only studies that appear in peer-reviewed academic journals include the correlation coefficient or have the necessary variables are used in this research (Pletzer, et al., 2016). The study design is not entirely appropriate due to the lack of manual evaluation of the evidence in accordance with standardized scales. The results of a meta-analysis of a total of 20 studies are as follows.

Data and Research Conclusions

The female participation across 3097 companies is limited (14% on average). No statistically significant evidence is found in support of a connection between female participation in the board of directors and the company’s financial performance. The findings correlate between developing and developed countries, which means that the income of a country has little or no effect on the effect sizes. “The relationship between female representation and firm performance remained independent of how firm financial performance was measured” (Pletzer, et al., 2016, p. 14).

Contributions to the Literature

The contribution of this research is that its authors deemphasize the fact that the relationship between female representation and financial condition of the organization is likely to depend on a variety of factors (Kochan, et al., 2003; Ali, Kulik, & Metz, 2009). The professionals make use of a linear model that can be advantageous for other studies as well, because it is applicable even in more specific cases, such as the reaction of the stock market towards the appointment of women in the top management (Sudeck & Iatridis, 2014, p. 73).

Although Pletzer and his team partially succeed at reaching their objective, their conclusions are of limited value due to the complexity of the issue under examination and several limitations of their methodology.

Critique of the Article

The strength of this meta-analysis is the approach toward data collection. The search query terms defined by the researchers, the inclusion of peer-reviewed studies from two reputable databases means that most of the evidence is scientifically valid. The inclusion of hand-searched articles, in addition to automated search, also improves the quality of data and the sample size. There are, however, several limitations to this meta-analysis. The first limitation is the small sample size: the resulting pool of data contains information from 20 studies.

This fact makes the statistical power of the data low. In addition, the researchers do not evaluate the quality of studies according to standardized scales. Instead, it is assumed that the quality of the studies will be consistent due to the fact that they are peer-reviewed and published in academic journals. In reality, the quality of data is lower than expected (Pletzer, et al., 2016, p. 15). The biggest limitation lies in the linear model, which implies a direct correlation between the board of directors’ gender diversity and the company’s financial performance.

References

2014 Catalyst Census: Women Board Directors. (2015).

Ali, M., Kulik, C., & Metz, I. (2009). The Impact of Gender Diversity on Performance in Services and Manufacturing Organizations.

Kochan, T., Bezrukova, K., Ely, R., Jackson, S., Joshi, A., Jehn, K.,… Thomas, D. (2003). The Effects of Diversity on Business Performance: Report of the Diversity Research Network. Human Resource Management, 42, 3-21.

Pletzer, J. L., Nikolova, R., Kedzior, K. K., & Voelpel, S. C. (2015). Does Gender Matter? Female Representation on Corporate Boards and Firm Financial Performance – A Meta-Analysis. PLoS ONE, 10(6), e0130005. doi:10.1371/journal.pone.0130005

Quarterly, M. (2015). A CEO’s guide to gender equality.

Sudeck, K., & Iatridis, G. (2014). Female board appointments and stock market reactions: evidence from the German stock market. Investment Management and Financial Innovations, 11(3), 73-80.

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