Women directors, board attendance, and corporate financial performance

• Published date: 01 March 2024
• Author: Jasmin Joecks,Kerstin Pull,Katrin Scharfenkamp
• Date: 01 March 2024
• DOI: http://doi.org/10.1111/corg.12525

ORIGINAL ARTICLE

Women directors, board attendance, and corporate financial

performance

Jasmin Joecks

1,2,3

| Kerstin Pull

1

| Katrin Scharfenkamp

4

1

Department of Human Resource

Management and Organization, University of

Tuebingen, Nauklerstr. 47, Tuebingen, 72074,

Germany

2

Kalaidos Fachhochschule, Zurich, Switzerland

3

FFHS, Brig, Switzerland

4

Department of Sports Science, Bielefeld

University, Bielefeld, Germany

Correspondence

Jasmin Joecks, Department of Human

Resource Management and Organization,

University of Tuebingen, Nauklerstr.

47, Tuebingen 72074, Germany.

Email: jasmin.joecks@uni-tuebingen.de

Funding information

Hans Böckler Foundation, Grant/Award

Number: 2014-705-2

Abstract

Research Question/Issue: Using insights from an in-depth qualitative interview

study, we propose an input-process-output model where the link between women

directors (input) and corporate financial performance (output) is mediated by board

attendance and where board attendance serves as a proxy of several intermediate

but latent board processes. Further, we dig deeper into the nonlinearities of female

boardroom representation by analyzing in how far the postulated mediation depends

on the number of women in the boardroom.

Research Findings/Insights: Analyzing quantitative data from German supervisory

boards over an 11-year period, we find the link between women directors and corpo-

rate financial performance to be partially mediated by board attendance, and we find

the mediation to depend on whether there is more than just one “token”woman in

the boardroom. When there is only one woman in the boardroom, her presence is

positively linked to board attendance, but the higher board attendance does not to

translate into a better corporate financial performance.

Theoretical/Academic Implications: Our study contributes to theory, by inductively

enriching our understanding of how and when women directors and corporate finan-

cial performance are linked.

Practitioner/Policy Implications: Our study encourages firms to appoint more than

one woman to the boardroom to profit from an enhanced board attendance that will

then also translate into a better corporate financial performance.

KEYWORDS

board attendance, corporate governance, firm performance, tokenism, women directors

1|INTRODUCTION

Women's representation on company boards has recently attracted

much attention in academia and politics (see Dobija et al., 2021;

González et al., 2020;Guldikenetal.,2019;Knippenetal.,2019;Kolev

et al., 2021; Tyrowicz et al., 2020). Empirical evidence on the link

between women directors and corporate financial performance, how-

ever, is inconclusive, and the mechanisms that drive the link are far

from being fully understood (see Cheng et al.,2021;Kirsch,2018;Ting

et al., 2021;Trianaetal.,2014). Starting with Miller and Triana (2009)

and inspired by the meta-analysis by Post and Byron (2015), the litera-

ture increasinglyaims to explore the potential mediators(e.g., Bennouri

et al., 2018; Galbreath,2018; Van den Oever & Beerens, 2021; Veltrop

et al., 2015) and boundary conditions (e.g., Cabeza-García et al., 2019;

Terjesen et al., 2016) of the link between female boardroom represen-

tation and corporatefinancial performance.

Received: 28 September 2021 Revised: 7 February 2023 Accepted: 4 March 2023

DOI: 10.1111/corg.12525

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,

provided the original work is properly cited.

© 2023 The Authors. Corporate Governance: An International Review published by John Wiley & Sons Ltd.

Corp Govern Int Rev. 2024;32:205–227. wileyonlinelibrary.com/journal/corg 205

In our paper, we add to this literature and analyze board atten-

dance as a potential mediator of the women–performance link. Specif-

ically, we argue that board attendance is linked to several

intermediate board processes that link board composition and board

task performance, thus establishing a relation between female board

representation, board attendance, and corporate financial perfor-

mance. Further, we argue that there is an important boundary condi-

tion to the postulated mediation in that it will only hold when there is

more than one woman in the boardroom. With our study, we thus fol-

low Post's and Byron's (2015) call for more research on the potential

boundary conditions of the link between women directors and corpo-

rate financial performance and at the same time complement the very

few existing works that simultaneously investigate potential media-

tors and boundary conditions of the link between board gender diver-

sity and corporate financial performance (see Ararat et al., 2015;

Triana et al., 2019).

Our focus on board attendance as a mediator of the link

between women directors and corporate financial performance is

inspired by the works of Adams and Ferreira (2009), Bianco et al.

(2015), and Boutchkova et al. (2021) who each find a positive link

between women directors and board attendance. Our study departs

from these existing works both, theoretically and empirically: theoret-

ically, (a) by elaborating on the intermediate board processes that link

women directors and corporate financial performance and by explic-

itly linking these intermediate board processes to board attendance;

(b) by including a potential boundary condition of the postulated

mediation in terms of whether there is only one or more than one

woman in the boardroom; (c) by substantiating our conceptual model

with the help of in-depth qualitative material from a self-conducted

interview study with 17 board directors, and empirically; by

(d) quantitatively analyzing the mediated link between women on

boards, board attendance, and corporate financial performance and

by quantitatively testing whether this mediation also holds in a situa-

tion where there is only one woman in the boardroom. While there

is literature supporting the view that board attendance and corporate

financial performance are positively linked (Brown & Caylor, 2006;

Chou et al., 2013; Lin et al., 2014), a mediation model linking women

on boards, board attendance, and corporate financial performance

has not been tested before, nor have any boundary conditions been

explored as yet.

In thus departing from the preceding literature, we aim to

enhance our understanding of why and when board attendance might

mediate the link between women directors and corporate financial

performance. With respect to the former (the “why”), we build on the

seminal work by Forbes and Milliken (1999) and focus on several

intermediate board processes that might link women on boards and

corporate financial performance and that at the same time might be

captured by board attendance. With respect to the latter (the

“when”), we refer to the concept of “tokenism”(Kanter, 1977) and

focus on the problems that might arise if there is only one “token”

woman in the boardroom and no further woman.

In summary, our contribution to the literature is threefold: Firstly,

from a theory perspective, explore the black box around the

intermediate processes on the board that link board composition and

board performance (Forbes & Milliken, 1999) by relating female board

representation to a set of intermediate board processes (i.e., the pres-

ence and use of knowledge and skills,board effort norms, and cognitive

conflicts) and by arguing that board attendance reflects important

aspects of these intermediate processes. As a result, we derive a con-

ceptual input-process-output model where board attendance medi-

ates the link between female board representation and corporate

financial performance. Additionally, we theoretically explore how

“tokenism”(Kanter, 1977) surfaces as a behavioral context that influ-

ences group dynamics and processes in the boardroom as highlighted

by Forbes and Milliken (1999) and that represents an important

boundary condition of the postulated mediation.

Secondly, we are the first to empirically test a mediating effect of

board attendance on the link between women directors and corporate

financial performance, and we are the first to explore the role of non-

linearities of women's board room representation in that mediation.

Our quantitative empirical analysis is based on data from German

supervisory boards. In a two-tier board system as in the German one,

the supervisory board is strictly separated from the executive board.

Its task, however, is similar to the one of outside directors in a one-

tier board system in that the supervisory board advises and monitors

the executive board (Dittmann et al., 2010).

Thirdly and from a methodological perspective, our design where

we use insights from a qualitative interview study to substantiate our

theoretical claims (see McDonald & Westphal, 2013 for a similar pro-

cedure) and subsequently test our model with the help of quantitative

data allows us to not only analyze whether the link between women

directors and corporate financial performance is mediated by board

attendance but rather also hints at why and when this link comes

about. By integrating qualitative and quantitative evidence, our study

overcomes the traditional polar methodologies (e.g., Currie

et al., 2009; McNulty et al., 2013; Onwuegbuzie & Leech, 2005).

2|INSTITUTIONAL CONTEXT: CO-

DETERMINED SUPERVISORY BOARDS

Our research is embedded in the German corporate governance sys-

tem that is characterized by a two-tier board structure. More specifi-

cally, our analysis focuses on the non-executive, supervisory board

and not on the management board. The supervisory board is strictly

separated from the management board; there is no overlap in mem-

berships within the same firm at the same time. The task of the super-

visory board is to counsel and monitor the management board and is

thus comparable to the one of outside directors in one-tier board sys-

tems (Dittmann et al., 2010). Most importantly, the supervisory board

appoints and dismisses the management board and sets its pay (Jäger

et al., 2021). The two-tier board structure can be found in many

countries all over th e world (see, e.g., Bozhinov et al., 2021;Gerner-

Beuerle & Schuster, 2013).

Depending on firm size, German supervisory boards are co-deter-

mined; that is, a certain fraction of its members is not elected by the

206 JOECKS ET AL.