Does board gender diversity improve firm performance? The case of Russian agroholdings

25 November 2021

Large scale farming is believed to contribute to ensuring global food security amid increasing demand for food worldwide. However, frequent financial problems among large agri-food producers might jeopardize local economies as well as global agricultural market due to their enormous size and their share in food production. Thus, obviously, not only the production capacity but also the economic sustainability of large agri-food companies affects food security. In this respect, it is important to study the factors of their financial performance. In the context of large corporate firms operated by hired management, corporate governance in general and boards of directors in particular are believed to play a crucial role in strengthening firm financial performance.

Earlier studies on the role of director boards mainly focus on the effects of board size, board independence, director ownership, and executive compensation on board functioning and firm performance. However, over the recent years, the role of board gender diversity in improving firm performance has gained increasing attention among scholars. Existing literature suggests that female directors can bring additional value to the boardrooms, and, accordingly, to the firms, as they tend to make decisions more carefully and are more diligent monitors. However, the research on this issue remains scarce, and mostly focuses on the US and other developed economies.

A recent article on the interlinkages between board gender diversity and firm performance, co-authored by Alisher Tleubayev, Ihtiyor Bobojonov, Taras Gagalyuk, and Thomas Glauben, aims to provide new empirical evidence on the topic in the context of large-scale agroholdings in a post-Soviet transition economy, namely Russia. The role of Russia in addressing the global food security issue is significant, as it is one of the world’s leading agricultural producers and exporters. A significant share of Russia’s agri-food production is concentrated in the hands of relatively few large companies. Currently, Russia’s 55 largest agroholdings control over 10% of the total farmland countrywide (12.6 million hectares), while top 25 meat producers account for 43% of meat production, and top 20 raw milk producers cover 9.7% of milk production in Russia. At the same time, the cases of financial distress or bankruptcies among Russian agroholdings are not uncommon.

Data and methods

For this study, the authors have used a sample of 261 randomly selected publicly reported agri-food companies in Russia. All the companies in the sample are involved in the production (crops, livestock, etc.) and/or processing (dairy and meat products, fat-and-oil, etc.) of the agri-food products and represent the sub-sample of all federal districts of Russia. The main sources of data are their corporate quarterly and annual reports as well as financial statements for 2016. To test the relationship between female representation on the corporate boards and firm performance, a 2SLS regression model has been applied.

On average, the corporate boards in the sample have 29% female directors, of which 15% are executive and 14% are independent directors. Around 27%, 29%, and 28% of the companies have one, two, and three or more female directors on their corporate boards, respectively, and only 16% of the companies have no female representation in their boardrooms. An average boardroom from the sample consists of about six directors, of which about 28.3% are independent directors. The chief executive officers (CEOs) of nearly 30% of all the firms receive performance-related bonus payments. Of the total shares of the firms, nearly 24% and 17% on average are owned by the boards of directors and CEOs, respectively. The average firm in the sample is 19 years old, has annual sales of RUB 1.9 billion (around US$ 25.3 million), and a debt-to-asset ratio of 45%. The average values of the return-on-assets (ROA) and return-on-sales (ROS) are 5.1% and 6.5%, respectively.


The results point to a strong positive relationship between the percentage of female directors in the boardrooms and firm performance in terms of both ROA and ROS. In particular, a 1% increase in the percentage of women in the boardroom leads to 0.18% and 0.59% growth in ROA and ROS, respectively.

In addition, the interlinkage between gender diversity and firm performance becomes stronger as the number of female board directors increases. Thus, firms with two/three and more female directors on the board on average have a 0.08% and 0.1% higher ROS, respectively, as compared to firms with only one female director on the board. Accordingly, the authors suggest that policy makers in Russia should consider prioritizing the issue of board gender diversity at the national level, particularly among large-scale agri-food producers. 
Interestingly, female directors seem to affect firm performance mainly through their executive rather than monitoring functions. Thus, companies can improve their company performance if their female board directors are empowered with executive responsibilities.

Last but not least, the study has not defined any correlation between the total board size and company performance. Therefore, company owners (shareholders) can afford to employ additional female directors without worrying about the total board size.

By Anna Feshchenko

This article is based on Alisher Tleubayev, Ihtiyor Bobojonov, Taras Gagalyuk, and Thomas Glauben (2020): "Board gender diversity and firm performance: evidence from the Russian agri-food industry”.