In our paper ‘Women in Finance’, we show that, across countries, banks have less gender diverse boards than other firms. Bank board diversity is particularly low in countries with greater gender gaps in PISA math scores and lower average math scores. We find similar results using state-level NAEP math scores in the US. The influence of math scores appears to transcend standard cultural explanations.

Given the important role the finance industry plays in economic growth, distortions in the allocation of talent to the management of financial firms can be costly to society. If women are relatively underrepresented on the boards of financial firms, we believe it is important to understand why.

More generally, we connect two policy debates that are usually conducted separately: the debate about women’s underrepresentation in math-intensive or STEM (Science, Technology, Engineering and Mathematics) fields and the debate about women’s underrepresentation on corporate boards. Our results suggest that low female participation in STEM and finance fields has important consequences for corporate leadership structures in STEM and finance industries.

Figure IV from our paper (below), illustrates the correlation between math outcomes and bank board diversity, as measured by the percent women on the board, in a concise manner. We plot mean board diversity for banks (top panels) and non-financial firms (bottom panels) stratified by above and below median math scores (left panels) and above and below median math gaps (right panels). The graphs show that mean bank board diversity is higher in countries with above median math scores and lower in countries with above median math gaps. If math outcomes simply proxy for (gender) culture, we would expect to see the same pattern for non-financial firms. But mean board diversity in non-financial firms is higher, not lower, in countries with above median math gaps, and there is no clear difference in mean board diversity in non-financial firms between countries with above and below median math scores.

Figure IV: Math Scores, Math Gender Gap and Boardroom Diversity for Banks and Non-Financial Companies over Time


While our own experience as finance academics suggests to us that women are particularly underrepresented in the finance sector, our arguments about math scores and female leadership outcomes are not specific to finance. In our paper we show that there is a similar correlation between math outcomes and women’s representation on boards in other math-intensive (STEM) sectors.

To ensure that the best managerial talent is in charge of firms, it may not be enough to ask or mandate firms to have more women on their boards. Board diversity policies may need to be adapted to industry circumstances. They may also need to be complemented by policies that directly address the barriers leading to low female participation. Our evidence suggests that differences in educational outcomes for boys and girls have long-lasting implications for their career development. Thus, we propose that a combination of board-level diversity policies and educational policies may be more effective at increasing board diversity than board-level policies on their own.

Renée B. Adams is a Professor of Finance and the Commonwealth Bank Chair in Finance at the University of New South Wales (UNSW).

Tom Kirchmaier is a Researcher at London School of Economics and Political Science (LSE).