Does Female Leadership Impact Firm Financial Performance?

An investigation and evaluation of the impact of a female in the chief executive officer position on the financial performance of a firm. Additionally, an examination of the impact of a change in leadership on specific industry sectors. I estimate financial performance by looking at different time frames of the firm’s stock returns. I use three channels to investigate my three positive hypotheses: direct, spill-over, and social trend effects. Each channel includes two different categories: the firm perspective on female leadership and the investor perspective. Using data from various sources compiled into one dataset from 1978 to 2021 and performing ordinary least squares regressions, I observe a contrasting result to the original hypothesis. Female leadership has a negative and insignificant impact on firm financial performance; this is deceiving as we find in the long run, a persistent, positive effect of female participation in a leadership group such as the Board of Directors. Female leadership in the long run, among groups, is of particular importance, rather than specifically the leadership in the CEO positions. The increase in female participation in leadership and management groups provides a long-term persistent growth. Firm experience has a positive and significant impact in the short term for the day stock return. Both multinational enterprise and the age of the firm have a negative and significant impact on the year stock return. Analyzing this relationship is important to understand board representation, help executive decisions, and encourage female empowerment.