The Effect of Gender Diversity on the Financial Performance of EU-Listed Companies

Researchers’ interest in the role that gender diversity plays in improving financial performance has increased significantly in recent years, particularly in the context of financial crises and multiple corporate scandals. Evidence from the literature is mixed, with most studies showing a positive impact and others showing a negative or no effect. In this context, this study examines whether gender diversity contributes to the maximization of financial performance. Accordingly, the paper investigates the relationship between the percentage of female board members and the financial performance of European Union listed companies. The empirical analysis is based on a sample of 249 companies, over a 12-year period (2013-2024). Financial performance is measured using return on assets, return on equity, and Tobin’s Q. There are estimated 24 regression models, using the ordinary least squares method with fixed effects, eight for each dependent variable, based on panel data, given the presence of strong correlations among the variables. In addition, due to the censored nature of the Tobin’s Q distribution, an additional set of eight Tobit models is estimated to verify the robustness of the results obtained. The results suggest a positive relationship between board gender diversity and financial performance, thereby validating the hypothesis formulated in this study. A more diverse board can help strengthen corporate governance practices, improve oversight, and maintain a favorable corporate reputation. At the same time, the study contributes to the existing literature by providing empirical evidence regarding the role of gender diversity in supporting financial performance and market value, highlighting relevant implications for decision-making and corporate governance practices.