The current research question is concerned with investigating the impact of worker and management diversity on US tech companies’ stock prices between 2010 and 2019. Therefore, it is important to find studies that show how gender diversity shapes organizations’ performance and what indicators point to either favorable or unfavorable results for firms. This review aims to meet this goal by analyzing available research on the issue.
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Article 1 – Does board gender diversity affect firm performance? Empirical evidence from Standard & Poor’s 500 information technology sector
The article aimed to investigate the impact of board gender diversity on IT organizations’ accounting and market-based performance. The researcher used a sample of Sample & Poor’s 500 companies operating within the IT sector over twelve years. Three null hypotheses were developed for the study, such as “The number of women on board does not influence firm performance,” “The percentage of women on board does not influence firm performance,” and “The percentage of female executives does not influence firm performance.” To explore the hypotheses, the researchers used data from companies in the 2009-2020 period to include the dependent variables such as return on assets (ROA), price to earnings per share (PER) as related to the independent variables aligned to the hypotheses. To determine the influence of board gender diversity, the study used base regression models.
The study found that the mean ROA was higher in organizations with at least one woman on the executive board compared to those with none. However, after the threshold of four females, the performance showed to decrease. As to PER, the findings were opposite, with the highest mean value of the variable registered when there were no women executives on boards. Thus, gender diversity does not have an overall positive impact on the performance of IT firms in all categories. However, the study provides policy suggestions to increase gender diversity as a way to improve the creativity, innovation, and productivity of firms. The study relates to the current research question as it illuminates the peculiarities of how gender diversity impacts IT firms’ performance. It relates to other articles by providing a background on gender diversity in IT firms and providing solutions for improvement.
Article 2 – Board gender diversity and stock price crash risk: Going beyond tokenism
The study is unique for exploring the issue of stock price crash risk (SPCR), which entails the asymmetry of variation in security returns, reducing investors’ wealth and affecting the stability and development of the capital market. The researchers hypothesized that companies with three and more women-directors will have fewer SPCRs compared to those with one or two women directors. The data was collected using Thomson Reuters from 1021 Asia-Pacific companies in the 2006-2016 period. Two different methods of measuring SPCR changes in relation to gender diversity were used: negative conditional skewness and down-to-up volatility.
The researchers found that SPCR was lower in organizations that had three or more women directors on their boards as opposed to those that had fewer than three. Importantly, the presence of female executives can reduce unwelcome news hoarding, which is among the leading causes of SPCR. Therefore, corporate boards should consider having at least three female directors to have a substantial impact on the operation of firms. This provides substantial implications for policymakers, regulators, managers and entrepreneurs in well-integrated markets. The findings also offer room for developing further research questions regarding developing governance mechanisms to facilitate gender diversity on boards and hire women directors to reduce the occurrence of SPCRs. In the future, it is possible to extend the study by empirically exploring the causal mechanisms for a firm’s engagement in corporate social responsibility. The study aligns with the current research question and shows how women executives impact the financial performance of firms. It validates other studies by suggesting that financial performance can improve due to diversity.
Article 3 – In good company: When gender diversity boosts a company’s reputation
The aim of the research article was to investigate whether white men viewed companies emphasizing gender diversity as more unbiased and prestigious. The focus on white males’ perceptions was made due to them being the most frequent occupiers of power and influence positions within corporations. The main research question formulated in the study was “does advertising a company’s gender diversity influence its corporate reputation?” The question pertains to the hypothesis that diversity enhances workplaces with the help of broadening employee perspectives and capabilities, improving the understanding and attractiveness of new markets, as well as improving corporate reputation or public image.
In the study, the researchers collected data from participants who completed surveys that questioned them on their perceptions of gender diversity. To explore how white men perceived gender-diverse organizations compared to non-diverse firms, independent samples t-test was performed with every variable. From the analysis, it was clear that organizations that promote their gender diversity can experience a boosted reputation compared to those that do not practice gender diversity nor advertise it. This provides suggestions for policymakers to increase the expectations of climates within organizations to facilitate diverse and inclusive organizational environments to boost their reputations and performance. In terms of future research questions, it is necessary to study the broader perspective and evaluate the perceptions of customers of companies’ gender diversity and its impact on reputation and financial performance. However, the study was limited to gender diversity, including only white women, which is why it is imperative to study diversity in firms including women of color. While the study does not provide a comprehensive discussion of financial performance, it relates to other studies as it illuminates the effects of gender diversity on reputation.
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Article 4 – Gender diversity on the board of directors and its impact on the Palestinian financial performance of the firm
The research aims to explore the influence of board of directors (BOD) gender diversity on the financial performance and success of firms. Importantly, adding the context of emerging markets is important because the issue of gender diversity has been primarily studied in developed countries where women in BODs are a common occurrence. The main question that the study had to answer was related to the causal relationship between female representation in boardrooms and company performance. The data for the sample included corporations from the Palestine Stock Exchange for the period between 2008 and 2015. The primary two industries of focus in the study were the service and industrial sectors, including a total of sixteen firms for analysis.
The research revealed a positive relationship between the various gender diversity proxies and the performance of firms. BODs that have gender diversity are more effective in overseeing managerial behaviors and advising management, thus working toward aligning the interests of managers and investors, which ultimately leads to better performance. However, the study lacks considerations for the US market, which is an issue that the current study can address. However, the article contributes to the recent research question and the articles explored above by showing that diversity can improve overall creativity within organizations and facilitate the problem-solving necessary for enhancing performance.