Female executives climbing a DNA-shaped corporate ladder.

Shattering the Glass Ceiling: Do Female Executives Boost Corporate Governance?

Samir D’Costa in Business & Economy August 2025 • 4 min read.

"Exploring the link between women in leadership and stronger corporate practices"

Corporate governance, the system of rules, practices, and processes by which a firm is directed and controlled, is often the subject of intense scrutiny. It influences a company's ethics, transparency, and ultimately, its success. While numerous factors shape corporate governance, one aspect that has garnered increasing attention is the role of women in leadership positions.

Prior studies have explored how attributes affect corporate governance. However, the impact of executive-specific characteristics has attracted surprisingly little attention from researchers. It is also important to provide company stakeholders reliable information. Previous studies indicate that the gender of the firm's executives and directors may affect corporate decision-making and, consequently, have implications for the firm's financial performance, market valuation, and financial reporting practices. Some suggest that increasing women on corporate boards may improve governance.

This article aims to discuss whether executive gender impacts corporate governance mechanisms. It will analyze the impact of top executives such as Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs), and will also study whether their gender affects the quality of corporate governance structures. By investigating the areas of audit, board of directors, compensation, and takeover defenses, it will be easier to determine whether gender and the quality of corporate governance are related.

The Hypothesis: Female Executives and Governance Quality

Female executives climbing a DNA-shaped corporate ladder.

Based on previous research indicating that personal values have a significant impact on their decision-making, and on the gender diversity theory and gender-based differences in managerial behavior, researchers have explored whether female executives are connected to the quality of corporate governance. The central hypothesis is that female executives have a positive influence on the quality of corporate governance. This stems from the notion that women are often reported to be more ethical, risk-averse, and conservative, all characteristics that could lead to more transparent and reliable governance practices.

To test this hypothesis, data from S&P 1500 firms was analyzed to compare governance quality, measured using the Corporate Governance Quotient (CGQ) from RiskMetrics Group, with the presence of female CEOs and CFOs. The CGQ assesses various factors, including:

Board of directors composition and practices
Audit committee structure and oversight
Antitakeover provisions
Executive compensation and ownership guidelines

The results of this investigation revealed key insights. In general, the findings suggest that companies with female CEOs and CFOs tend to exhibit stronger corporate governance mechanisms. Those results suggest that nominating females to top positions within a firm may be advantageous in terms of improving firm-level governance policies. The logical next step from this analysis would be to examine what the improved governance means in practice from the financial perspective. In general, this can assist in furthering gender awareness, highlighting how it may also impact working life.

Looking Ahead: The Broader Implications

These empirical findings contribute to the ongoing dialogue about gender diversity and its potential impact on corporate performance. While the study acknowledges certain limitations, such as sample size and the challenges of accurately measuring governance quality, it suggests that increasing the number of women in executive roles is not simply a matter of social justice, but also a strategic move that could enhance a company's governance practices. Ultimately, understanding the relationship between corporate governance mechanisms and specific executive characteristics, such as risk aversion, may be of researchers' interest in the future.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1108/mf-04-2016-0098, Alternate LINK

Title: Female Executives And Corporate Governance

Subject: Business, Management and Accounting (miscellaneous)

Journal: Managerial Finance

Publisher: Emerald

Authors: Emilia Vähämaa

Published: 2017-10-09

Everything You Need To Know

What is corporate governance, and why is it important?

Corporate governance is the system of rules, practices, and processes by which a firm is directed and controlled. It is crucial because it influences a company's ethics, transparency, and ultimately, its success. Strong corporate governance is associated with better financial performance and greater investor confidence. It ensures that companies operate with integrity and accountability, which are vital for long-term sustainability.

How does the gender of top executives, like Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs), potentially impact corporate governance?

The gender of executives can influence corporate governance through their decision-making processes. The research suggests that female CEOs and CFOs may lead to higher quality corporate governance. This is because women are often perceived as more ethical, risk-averse, and conservative, leading to more transparent and reliable governance practices. These characteristics can positively impact areas like audit committee structure, board of directors composition, and executive compensation.

What specific corporate governance mechanisms were examined in the study to assess the impact of female executives?

The study focused on several key areas to determine the relationship between female executives and corporate governance quality. These include the audit committee structure and oversight, the composition and practices of the board of directors, executive compensation and ownership guidelines, and the presence of antitakeover provisions. The Corporate Governance Quotient (CGQ) from RiskMetrics Group was used to assess these factors, providing a comprehensive view of governance quality.

What were the key findings regarding the presence of female executives (CEOs and CFOs) and the quality of corporate governance?

The findings suggest that companies with female CEOs and CFOs tend to exhibit stronger corporate governance mechanisms. The study indicates that nominating females to top positions within a firm may be advantageous in terms of improving firm-level governance policies. This supports the hypothesis that female executives have a positive influence on the quality of corporate governance due to their potential impact on decision-making and approach to risk.

Besides the direct impact on governance, what are the broader implications of increasing female representation in executive roles, and what are the limitations of this study?

Beyond the immediate effects on corporate governance, increasing the number of women in executive roles could enhance a company's governance practices and also potentially improve corporate performance. However, the study acknowledges limitations such as sample size and the challenges of accurately measuring governance quality using the Corporate Governance Quotient (CGQ). Further research is needed to fully understand the relationship between specific executive characteristics and corporate governance mechanisms, along with the financial implications of these improvements.