Do Women on Corporate Boards Impact Financial Performance? A Study of Indian Firms

This study examines the impact of a quota in India which mandated that all firms with an annual revenue of over Rs.300 crore (equivalent to USD$40M) have at least one woman on their board. Using a difference-in-difference regression analysis, I find that having a woman on the board results in a 0.4483 percentage point increase in return on invested capital for firms which did not already have a woman on their board prior to the quota being enacted. I also exploit the revenue cutoff in the quota to conduct a regression discontinuity analysis which produces results consistent with the above. These benefits existed even when the cost of appointing a woman was low, demonstrated by the fact that even firms well below the revenue cutoff appointed a woman, and that most of the women appointed did not have relevant industry experience. This study therefore provides causal evidence for the effect of corporate board gender diversity on firm performance, a relationship that has been understudied within the context of developing countries.