The effect of gender in firms' top management on corporate profitability

Abstract

In this paper, we investigate how gender in firms’ top management affects firm profitability, using a large data sample on Norwegian private limited liability firms (AS firms) from 2000 to 2018. We find evidence that female CEOs have a negative impact on profitability in firms without board gender diversity and in small firms, while having a positive effect in larger firms. When dividing into family and nonfamily firms, the results mostly stay consistent for family firms, in particular those with family CEOs. Female directors have a negative impact on all our profitability measures in small firms and no effect in medium-to-large firms. The negative effect was slightly less negative after the Gender Balance Law, and stronger for family firms than non-family firms. Our findings suggest that the effect gender has on profitability depends on a range of factors, highlighting the importance of looking at gender issues through multiple lenses.