Assessing the Economic Value of Female Leadership in Top Management
Teams Through an Instrumental Variable Framework and Industry-Level
Analysis

Amishi Gupta

doi:10.46609/IJSSER.2025.v10i11.009

Title: Assessing the Economic Value of Female Leadership in Top Management Teams Through an Instrumental Variable Framework and Industry-Level Analysis
Authors: Amishi Gupta
Journal: International Journal of Social Science and Economic Research (IJSSER) ISSN: 2455-8834 Volume: 10 Issue: 11 Publication Date: November 2025 DOI: 10.46609/IJSSER.2025.v10i11.009
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Amishi Gupta The Harker School
MLA 8 Gupta, Amishi. "Assessing the Economic Value of Female Leadership in Top Management Teams Through an Instrumental Variable Framework and Industry-Level Analysis." Int. j. of Social Science and Economic Research, vol. 10, no. 11, Nov. 2025, pp. 5762-5787, doi.org/10.46609/IJSSER.2025.v10i11.009. Accessed Nov. 2025. APA 6 Gupta, A. (2025, November). Assessing the Economic Value of Female Leadership in Top Management Teams Through an Instrumental Variable Framework and Industry-Level Analysis. Int. j. of Social Science and Economic Research, 10(11), 5762-5787. Retrieved from https://doi.org/10.46609/IJSSER.2025.v10i11.009 Chicago Gupta, Amishi. "Assessing the Economic Value of Female Leadership in Top Management Teams Through an Instrumental Variable Framework and Industry-Level Analysis." Int. j. of Social Science and Economic Research 10, no. 11 (November 2025), 5762-5787. Accessed November, 2025. https://doi.org/10.46609/IJSSER.2025.v10i11.009.
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ABSTRACT: This study examines whether female representation in top management teams (TMTs) causally affects firm performance using a shift–share instrumental variable approach. The dataset combines Compustat and ExecuComp panel data for 1,589 U.S. public firms from 1997 to 2023. Results show that a one percentage-point increase in female TMT representation raises net income by about $18.85 million, or roughly $377 million for a one-woman swap in a fivemember executive team. However, when analyzed by sector, female leadership is less effective in the primary sector for internal performance (net income decreases by about $67 million per 1 pp) and in the quaternary sector for external performance (Tobin’s Q decreases by 0.071 per 1 pp). These results suggest that female leadership faces barriers in capital-intensive industries, where structural and technical demands limit their impact on internal performance. Additionally, in knowledge-based sectors, external market valuations tend to fall under femaleled management, reflecting investor and public bias in assessing leadership effectiveness and thus company success. The study contributes to strategic management and human resource management research by providing causal evidence of the economic value of gender diversity. Female representation should be prioritized in executive teams, yet its impact remains shaped by industry and environmental contexts rather than being uniform across all firms.

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