Women in the boardroom: Performance and Quotas

Abstract: Purpose: The purpose of this thesis is to evaluate how the percentage of female directors on a company’s board affects the firm’s performance. The empirical results of this thesis will be used to help decide whether Canada should establish a quota for female board members. Theories: There are four main theories referenced in this thesis, they are; agency theory, signaling theory, resource dependency theory, and board size and performance. Methodology: Three measurements are used to evaluate firm performance, they are; average return, Tobin’s q, and return on assets. Three types of regressions are used, they are; ordinary least squares, fixed effects, and two stage least squares. The data needed to perform this thesis was taken primarily from annual reports and stock indices. Conclusion: This thesis has come to the conclusion that there is no observable performance benefit to adding more women to the board of directors. Out of all the regressions performed not a single one found a significant and positive relationship between the percentage of women on the board and performance. These results suggest that if Canada decides to implement a gender quota for public corporations, they should not expect to observe any increase in firm performance.