Financial performance and risk behavior of gender-diversified boards in the Chinese automotive industry: initial insights

Horak, S., & Cui, J. (2017). Financial performance and risk behavior of gender-diversified boards in the Chinese automotive industry: initial insights. Personnel Review, 46(4), 847-866. DOI: 10.1108/PR-10-2015-0274  

Purpose: Recent legislation in Europe and North America encourages women’s participation in corporate boards based on the belief that gender-diversified boards contribute positively to firm performance and increased competitiveness. Contrary to the West, the women’s participation rate in business has been traditionally high in China. Our main research aim is to find out whether gender-diverse corporate boards of Chinese automotive firms perform better financially than gender-homogeneous boards.
Design/methodology/approach: By drawing on data from the Chinese Government and Bloomberg, we compare and analyze the differences in financial performance (return on equity, asset growth, sales growth) and risk behavior (debt risk, R&D expenditure) of Chinese automotive firms with and without women on their corporate board.
Findings: We find significant evidence that firms with women on the board perform better across all three categories, with the exception of return on equity, for which we found no significant differences among the firms analyzed.
Practical implications: While women’s participation in corporate boards in China is low, the results of this study suggest to policy makers and firms alike to implement measures that support gender-diversified boards in order to take advantage of their potential to increase corporate performance.
Originality/value: So far, the performance of corporate boards of countries with a traditionally high share of female participation in the workforce has rarely been analyzed. Research focusing on the Chinese automotive industry is new and under-represented, although China is the largest automotive market worldwide and a key industry of the domestic economy. This investigation contributes to the literature stream on board diversity in as well as to industry-related studies. With the example of the Chinese automotive industry, it provides empirical evidence of better performance of firms with gender-diversified boards within the categories tested.

Corporate Governance, Diversity Management, Gender in Management, Corporate Boards, Automotive Industry, China

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