Does female representation on corporate boards improve intellectual capital efficiency?

Purpose: The purpose of this paper is to analyse the relationship between female representation on corporate boards and intellectual capital (IC) efficiency – while prior studies focus on the relationship between gender diversity and firms’ financial performance. Design/methodology/approach: Drawing on data from top 500 UK listed firms for 2007–2016 (3,279 firm-years), this study employs an adjusted-value-added intellectual coefficient as a measure of IC efficiency. Further, the two-step system-generalised method of moments has been applied to account for endogeneity issues. Findings: The results reveal a significant positive relationship between female representation on boards and IC efficiency, including human capital, structural/innovation capital and financial capital efficiency. These results are robust to alternative proxies for the independent variable and difference-in-difference estimation. Practical implications: The results posit that female representation on boards is associated with IC efficiency, which is vital for firms’ value creation and competitive advantage in the knowledge-economy era. The study also endorses current legislation to increase female representation on corporate boards. Originality/value: This is among the limited studies to explore the role of female representation on boards in IC efficiency – while most prior studies relate IC efficiency to financial performance.