Female directors, R&D activities and firms' investment efficiency: evidence from China

In this study, we investigate if board composition, namely board gender diversity, constitutes a pathway to more efficient allocation of capital through greater restraint in R&D activities of Chinese-listed companies. Assessing a large panel of Chinese listed firms over the period of 2009-2017, we find a negative relation between board gender diversity and firms' innovation inputs and outputs. Boards with more female directors exhibit lower investment inefficiency, resulting in better allocating firms' resources and higher firm performance. This effect is accentuated in state-owned firms, illustrating that female directors help reduce firms' investment inefficiency especially those controlled by state.