Female Directors on Corporate Boards of private firms: A study on the impact of board gender diversity on firm performance and corporate risk

Abstract: This thesis examines whether female board of directors in private firms can influence firm financial performance and corporate risk. First, the study investigates if gender diversity in boards per se has an influence on firm performance and risk. Additionally, we explore whether it is necessary for the board to consists of at least 30% female directors as related to the Critical Mass theory for the women to be able to influence organizational changes and boardroom dynamics. We run a multivariate linear OLS model and firm fixed effects model on an unbalanced panel data set between 2010 and 2019 on middle-sized unlisted firms in Sweden. The findings provided no support for a statistically significant relationship between the fraction of female directors and firm performance regardless of the proportion of female directors. However, we found statistically significant evidence in support for the hypothesis that females can influence the company's governance and lower the firm risk if they reach a critical mass and hold at least 30% of the board seats. In other words, we find no support for a clear relationship between females on boards and firm financial performance, but do find support for a significant relationship between females on boards and firm corporate risk.