Does the gender quota make sense? Women on supervisory boards and firm performance

Abstract

On March 6, 2015, Germany followed Norway’s lead and introduced a statutory gender quota for supervisory boards, requiring publicly listed and parity co-determined companies to give at least 30% of their board seats to women. In a sample of 72 German companies, we explore the effect of gender quotas on firm performance. Consistent with previous literature, we find evidence that the introduction of a quota law harms firm performance as measured by ROA. However, the magnitude of this effect is smaller, while still negative, for firms with a higher percentage of gender diversity on supervisory boards. Furthermore, we account for heterogeneity in ownership, culture, and industry. The moderating effect of board gender diversity on the negative law effect is stronger for non-family-owned firms, firms headquartered in a protestant region, and non-manufacturing firms. Conversely, this moderating effect disappears with regard to family-owned firms, firms located in a catholic region, and manufacturing firms. Our results are robust controlling for firm-level time varying characteristics as well as firm fixed effects.