Question

Question 3

Critically evaluate if increasing the proportion of female executives on corporate boards will lead to better firm performance and less risk-taking.

Answer 1

Question 3:

The gender diversity in the board indeed leads to better firm performance, as it improves the image of the firm and if this positive image translates into consumer behavior it leads to a better firm performance and higher shareholder value. It helps in the better understanding of the market place and increases creativity and innovation. The firms having women in the board have better work environment , a more focused recruitment policy and good working conditions.

A heteregeneous board, makes decisions upon evaluating a large number of alternatives compared to fewer number of alternatives evaluated by a homogeneous board. So, it leads to less risk taking.

On the other hand , it has also been noticed that, a homogeneous board reacts quickly to market shocks whereas a heterogeneous board consisting of both the sexes on the board, although takes better quality decisions but the decision making process is very slow and tedious, which reduces the competitiveness of the firm in the market place as it may lead to more conflicts among the board members.