Abstract

This paper investigates the association between gender composition of board members and firm financial performance in Canadian companies listed on the Toronto Stock Exchange (TSX). Through the conceptual lenses of tokenism and critical mass theories, our study provides new insights into the relationship of board gender diversity and performance by adding an important but overlooked moderating variable, notably the effect of firm size. We use data from 235 Canadian firms across 11 industry sectors for the period of 2019. The results demonstrate that large sized firms with at least 30% of women on the board of directors are likely to outperform their competition, as measured by Tobin’s Q. Through this study, we make a theoretical contribution to the literature by expanding upon the tokenism and critical mass theories. Practitioners will also gain deeper insights on how the role of women on corporate boards can impact performance for their respective firms.