Total female corporate leadership share is estimated with a statistically significant positive coefficient in all four of the regressions in which it appears.
As a further check on robustness, we reestimated the regressions excluding small firms, defined as firms with annual revenues of less than $1 million, boards with fewer than five members, or executive ranks with fewer than five members. The results, reported in table 4, reconfirm the results obtained originally: The evidence on the positive correlation between the share of female board members and firm performance is not robust, but the positive correlation between firm performance and the share of women in upper management is.
Taken together, the pattern of results reported in tables 2–4 suggests a kind of “pipeline” interpretation of the effect of gender diversity. There is no statistically observable impact of having a female CEO, and the impact of women’s presence on the board is not statistically robust.
However, the correlation between women at the C-suite level and firm profitability is demonstrated repeatedly, and
the magnitude of the estimated effects is not small. For example, a profitable firm at which 30 percent of leaders are women could expect to add more than 1 percentage point to its net margin compared with an otherwise similar firm with no female leaders. By way of comparison, the typical profitable firm in our sample had a net profit margin of 6.4 percent, so a 1 percentage point increase represents a 15 percent
boost to profitability. When considering a broader set of firms, both profitable and unprofitable, the result is even more striking. For the sample as a whole, the firm with more women can expect a 6 percentage point increase in net profit, while overall median net profit was just over 3 percent.
