Firm Value and Bankruptcy Risk Under Women Management Across Cultures and Economic Cycles

ABSTRACT

The presence of women in high‐level positions in companies has become a prominent issue in recent years, and several studies have investigated their influence on a company's performance and risk. We extend this literature by analyzing the impacts of women's management on the firm value and bankruptcy risk across different cultures and periods of economic recessions. With a data sample of 918 companies that constitute essential stock market indices from 20 different nationalities from 2010 to 2022, we show that when women are in important leadership positions, the firm value increases, and the risk of bankruptcy reduces. Furthermore, the results suggest that the positive (negative) association between gender diversity and firm value (bankruptcy risk) is relatively stronger in countries with lower levels of gender equality, which reflect a compensatory governance role and/or a selection effect among women who overcome stronger institutional and cultural barriers to leadership positions. We also find evidence that female leadership is associated with greater firm resilience during periods of economic recession, reflected in higher firm value and lower bankruptcy risk.