The Influence of Female Leadership Towards Performance: Evidence from Western European Financial Firms

Abstract

Does the appearance of women at the executive position in the boardroom make any differences in firm performance, especially in the financial sector which is well-known to be a male dominated sector? Inspired by that question, our study aims to explore the influence of female leadership in firm performance. We investigate this relationship from a comprehensive dataset comprising of 310 listed financial institutions from 21 Western European countries. The endogeneity concerns were removed using a Two stage approach least square (2SLS) and Generalized method of moments (GMM). Critically, we demonstrated that women's appearance at alternative managerial levels, including the chairperson, executive, and total female directors in the boardroom, negatively influences both firm accounting and market-based performance. We further explore that the percentage of women in the boardroom (excepting non-executive female directors) has a negative impact on performance only in low-performing firms. Our findings argue with previous studies which encouraged more involvement of women at higher managerial levels. We believe that women's unique characteristics are addressed to alleviate interest behavior, but they tend to reduce the performance of financial firms.

How do females in top executive positions influence firm profitability: new insight from non financial firms on Ghana Stock Exchange

“…These tests confirmed the normality of the data. In developing the specific model for the study, the prior works of Tran et al (2021), Vo et al (2021) and Appiadjei et al (2017) were followed: …”

“…Explanatory variables : The main explanatory variables in the study’s model are female board chairperson (FChairperson), female chief executive officer (FCEO) and presence of females on boards. Female board chairperson is a dummy variable that takes on the value of 1 if board chairperson for a specific year is a female or 0 otherwise as used by Tran et al (2021). Also, female CEO is a dummy which takes the value of 1 if CEO for a particular year is female otherwise 0 as employed by Tran et al (2021) and Satriyo and Harymawan, (2018).…”

“…Female board chairperson is a dummy variable that takes on the value of 1 if board chairperson for a specific year is a female or 0 otherwise as used by Tran et al (2021). Also, female CEO is a dummy which takes the value of 1 if CEO for a particular year is female otherwise 0 as employed by Tran et al (2021) and Satriyo and Harymawan, (2018). Finally, the presence of females on board (WoB) is a dummy variable that takes on the value of 1 if there are 1 or more females on board, otherwise 0 (Li and Chen, 2018).…”

Women in Corporate Governance in Banking: A Bibliometric Analysis

“…Mazzotta & Ferraro, 2020; Del Prete & Stefani, 2021) and in Germany(Berger et al, 2013;Berger et al, 2014), there were two studies in each, while in 12 studies the research was conducted in more than 1 country, so that in the study ofTran et al (2021), there is the largest sample of countries, i.e., 21 Western European countries. In 25 studies, the data Literature review of WoS studies of women in corporate governance in banking4 Women's impact on banking corporate governance According toBaklouti (2022), women on Sharia Supervisory Boards do not appear to have any effect on how Islamic banks financially perform Khan (2010).…”

“…and in one study the survey type questionnaire is used(Jamali et al, 2007).Six studies provide evidence of the indirect effect that women have on corporate governance in the banking industry (Table2). According to Lu and Boateng's (2018) study, the presence of females on boards has a significant indirect credit risk effect Tran et al (2021). demonstrate that the presence of women at different management levels negatively affects the accounting of the institution, what their market performance is, etc.…”