Voluntary gender diversity targets and their impact on firm performance and firm value

Regulators in the United Kingdom (UK) recommend that 33 percent of board members of large UK firms be female by 2020. We use this setting to investigate whether greater female representation and any associated financial benefits can be achieved without establishing quotas. Using data between 2012 and 2018 for the FTSE 350 firms, we find a significant increase in female representation on boards in recent years, and that the rate of increase in gender diversity is higher in these years. Our results also indicate that board gender diversity is positively associated with both financial performance and firm value. However, this association exists only in recent years. Finally, capital market participants value non-executive female board members more than executive female board members.