The legal and corporate governance perspective on female directors’ effect on firm performance: An endogeneity analysis

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Abstract

This study examines the influence of female directors on firm performance while addressing the endogeneity often overlooked in prior research. Using a panel dataset of 17,220 firm-year observations from publicly traded U.S. non-financial firms between 2000 and 2018, the study employs various econometric methods, including fixed effects (FE), two-stage least squares (2SLS), system generalized method of moments (GMM), and a control function approach, to determine the causal impact of board gender diversity. The findings show a positive link between female board representation and firm performance, even after accounting for endogeneity, reverse causality, and omitted variable bias. These results support the predictions of agency and resource dependency theories and suggest that gender diversity enhances governance and firm outcomes.

Keywords: Firms’ Performance, Gender Diversity, Systematic Review, Endogeneity Problem

Authors’ individual contribution: Conceptualization — N.Y., H.Al., and H.An.; Methodology — N.Y., H.Al., and H.An.; Software — N.Y., H.Al., and H.An.; Validation — N.Y., H.Al., and H.An.; Formal Analysis — N.Y., H.Al., and H.An.; Investigation — N.Y., H.Al., and H.An.; Resources — N.Y., H.Al., and H.An.; Data Curation — N.Y., H.Al., and H.An.; Writing — N.Y., H.Al., and H.An.; Visualization — N.Y., H.Al., and H.An.; Funding Acquisition — N.Y., H.Al., and H.An.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M0, M1, M4

Received: 05.11.2025
Revised: 09.01.2026; 21.01.2026
Accepted: 27.01.2026
Published online: 30.01.2026

How to cite this paper: Yami, N., Alshurafat, H., & Ananzeh, H. (2026). The legal and corporate governance perspective on female directors’ effect on firm performance: An endogeneity analysis. Corporate Law & Governance Review, 8(1), 110–123. https://doi.org/10.22495/clgrv8i1p9