Where gender matters most: divergent patterns linking diversity and patriarchy to operating and financial performance

Abstract

Purpose This study analyzes the associations between board gender diversity (BGD) and firms’ operating and financial performance, and examines how these associations vary with patriarchal cultural attitudes. Drawing on social role theory and role congruity theory, we argue that BGD relates to firm outcomes through negotiation-based mechanisms that differ across operating and financial activities. Design/methodology/approach Using an international sample of 916 listed firms from 18 European countries over 2005–2022, we employ pure measures of operating and financial profitability to isolate the components through which BGD is linked to revenues and expenses. Findings The results show that greater BGD is associated with higher pure operating profitability, through higher operating revenues and lower operating expenses, and with lower pure financial profitability, through lower financial revenues and higher financial expenses. Patriarchal attitudes moderate these patterns by weakening the positive associations between BGD and operating outcomes and attenuating the negative associations with financial outcomes. Originality/value The study contributes to corporate governance research by demonstrating the value of disaggregating performance into operating and financial components and by showing how cultural norms shape the extent to which women directors’ skills and monitoring behaviors translate into firm performance.