From boardroom to executive suite: exploring the trickle-down effect of gender diversity in an emerging economy

This paper examines the impact of women’s representation on corporate boards on gender diversity within the top management team (TMT) in the context of Bangladeshi listed firms. Board diversity has become a key focus in recent studies, exploring how board composition influences business operations in today’s dynamic, technology-driven, and highly competitive environment (Biswas et al., 2023; Sarhan et al., 2019). Among various board composition attributes, board gender diversity (BGD) has garnered significant attention in the twenty-first century (Nguyen et al., 2020). One of the main drivers of this growing interest is the persistent underrepresentation of women in corporate leadership positions, including boardrooms and top management (Sarhan et al., 2019; Opstrup and Villadsen, 2014). Stakeholders emphasize the importance of gender diversity on corporate boards, with research indicating that such diversity enhances board performance (Ntim, 2015; Gyapong et al., 2021). BGD enhances both financial and non-financial firm performance by strengthening governance, improving board dynamics, and enhancing decision-making quality (Nadia et al., 2024; Ntim, 2015; Nguyen et al., 2020; Haque et al., 2024).

Recognizing the importance of gender equality, corporations worldwide have faced increasing pressure from governments and society through legislative measures and recommendations promoting gender diversity (Biswas et al., 2023; Sarhan et al., 2019). Many governments have introduced mandatory quotas or voluntary affirmative policies to increase female representation in boardrooms. However, regulatory approaches vary across countries. For instance, several nations, including Norway, France, Italy, Germany, Finland, Australia, and Kenya, have implemented mandatory quotas ranging from 30% to 40% for women on the boards of listed companies (Terjesen et al., 2015; Biswas et al., 2023; Bernile et al., 2018). Meanwhile, voluntary gender quotas have been adopted in countries such as the UK, Spain, and the Netherlands (Lee and Thong, 2023). Several South Asian countries, such as Malaysia, India, and Pakistan, have enacted laws requiring public firms to have at least one female board member (Terjesen et al., 2015). These legislative and voluntary efforts have spurred a growing research interest in examining the impact of female board representation on corporate performance.

While empirical studies have explored the relationship between BGD and various corporate outcomes (see review, Nguyen et al., 2020), particularly financial performance, few have examined the trickle-down effect within firms (Kirsch, 2018). Limited research has investigated how the presence of women on corporate boards influences female participation across different organizational levels. Most existing studies focus on well-regulated markets such as the United States, Australia, and the United Kingdom (Skaggs et al., 2012; Cook and Glass, 2015; Ali et al., 2021; Biswas et al., 2023), as well as Spain (Delgado-Piña et al., 2020). As the highest governing body of a firm, a board with greater gender diversity is expected to have a spillover effect throughout the organization, a phenomenon known as the trickle-down effect (Gould et al., 2018b). Some research has also identified reverse or bottom-up effects, wherein gender diversity at the management level influences BGD. For example, studies from the USA (Matsa and Miller, 2011) and Australia (Ali et al., 2021; Gould et al., 2018b) suggest that both trickle-down and bottom-up effects contribute to greater gender diversity. The concept and outcomes of the trickle-down effect in regulated environments raise the question of how BGD influences gender diversity within the TMT in unregulated settings such as Bangladesh.

The trickle-down concept is supported by theories such as signalling theory (Spence, 1973), similarity-attraction (Byrne, 1971), homophily (Ibarra, 1993), and agency theory (Jensen and Meckling, 1976). These theories suggest that female directors serve as motivating factors for other women through advocacy, supervision, and a tendency to support other female colleagues (McPherson et al., 2001; Gould et al., 2018a, b; Gyapong et al., 2021; Stainback et al., 2024). Although male-dominated boards may limit the influence of a small number of female members in critical strategic decisions, such as recruitment and selection, simply having women on the board sends a signal to employees about the company’s commitment to gender equity and the value placed on women’s contributions (Sarhan et al., 2019). This can create a more inclusive workplace culture that supports women’s career advancement (Bilimoria, 2006) and strengthens the firm’s ability to attract and retain top female talent (Kanter, 1977a).

Empirical studies on the trickle-down effect have primarily focused on countries with legislative quotas or recommended gender diversity policies by governments. However, limited research exists on this effect in countries without such regulations, and even fewer studies have examined the trickle-down effect of BGD on management levels in emerging markets like Bangladesh. Unlike in developed economies, women’s presence on corporate boards in emerging markets is often symbolic rather than substantive due to entrenched male-dominated corporate structures (e.g. Dey et al., 2023; Ntim, 2015). In Bangladesh, female directors often come from the family of male directors, or at least highly connected networks, raising concerns about their influence on strategic decision-making (Saima and Arefin, 2022). This study addresses this gap by examining how board gender diversity affects female representation in TMTs in an emerging market. Additionally, it explores whether this relationship varies based on the number of female directors, considering the critical mass effect.

Using a sample of 390 firm-year observations from 2018 to 2022, we find that BGD significantly enhances the likelihood of women’s inclusion and greater representation in the management committee, indicating the trickle-down effect. This finding aligns with prior findings from developed countries such as the UK (Biswas et al., 2023), Spain (Delgado-Piña et al., 2020), Australia (Gould et al., 2018a), and the USA (Bilimoria, 2006). Although the 2018 Corporate Governance Code in Bangladesh does not specifically address gender equity at either the board or management level, our findings indicate that BGD positively impacts senior management gender diversity even in the absence of regulatory mandates. However, this effect is only statistically significant when there are at least three women on the board supporting the principles of the similarity-attraction paradigm, homophily, and critical mass theory. We conduct a battery of robust tests, including propensity score matching to address observable heterogeneity bias, instrumental variable approach to mitigate reverse causality, and alternative measures of BGD and gender diversity in TMT to analyse sensitivity. The results of these analyses are consistent with the baseline findings, strengthening the credibility of our findings.

This study contributes to the growing body of gender diversity literature by offering insights from an emerging economy’s context. To our knowledge, this is the first study to examine the relationship between BGD and gender diversity in TMT within the context of Bangladesh. It demonstrates that BGD increases women’s representation in top management, reinforcing the trickle-down effect in developing economies. While previous literature documents the role of BGD on various firm factors, including financial performance (Maji and Saha, 2021; Sarhan et al., 2019), corporate social responsibility (CSR) disclosure (Ben-Amar et al., 2017; Yarram and Adapa, 2021), environmental performance (Cordeiro et al., 2020; Haque et al., 2024), cost of debt (Usman et al., 2019), earnings quality (Zalata et al., 2022; Srinidhi et al., 2011), risk disclosure (Seebeck and Vetter, 2022), dividend policy (Gyapong et al., 2021), and corporate innovation (Xie et al., 2020); this study highlights the impact of BGD on gender diversity in the management committee. While the underrepresentation of women in TMT is more evident in developing countries, BGD can be a catalyst in reducing this gender gap in TMT.

Second, although most female directors in Bangladesh originate from male-dominated families or maintain close connections with influential figures, achieving a critical mass on the board is crucial for overcoming tokenism (Saima and Arefin, 2022). This critical mass enables women to participate more actively in strategic decision-making, including recruiting and selecting TMT (Biswas et al., 2023). Therefore, this paper shows how the influence of women directors varies with their proportion of presence, testing through the lens of tokenism and critical mass. We provide evidence that having at least three female directors on the board leads to corresponding increases in gender diversity within the executive committee. These insights can guide policymakers and regulators in formulating initiatives to promote gender equity. By increasing female representation on boards and management, firms in emerging economies can benefit from diverse skills, perspectives, and leadership capabilities.

Finally, gender diversity can enhance employee productivity (Delgado-Piña et al., 2020), increase market value (Sarhan et al., 2019), and establish a legitimate identity of diversity (Gould et al., 2018a), making it essential for policies to advance women’s empowerment and access to top management roles and board directorships. Empowering women in senior management enables them to take on critical operational roles such as coordination, implementation, reporting, and oversight (Haque et al., 2024). This active involvement enhances their leadership capabilities and significantly bolsters the corporate reputation (Martín-Zamora et al., 2024). The study elucidates the efficacy of a top-down approach, revealing that increased female directorship correlates with higher female representation within executive teams. This finding underscores the importance of enhancing gender diversity on boards as a strategic measure to achieve broader organizational benefits. Moreover, the study supports the UN’s Sustainable Development Goal (SDG) 5 on gender equality.

The rest of the paper is structured as follows: Section 2 articulates the background of the study, while Sections 3 and 4 outline the theoretical framework and hypotheses development, respectively. Section 5 details the research design, sample selection, data collection, and empirical analysis techniques. Section 6 presents the empirical results. Section 7 discusses the findings and their policy implications, and Section 8 concludes the study.

Bangladesh has reached several milestones over the past 5 decades since its independence in 1971, particularly in financial indicators. For instance, the country maintained an average real GDP growth of 6.4% from 2010 to 2023, reduced poverty to 5% in 2022, and increased GDP per capita from $90 in 1973 to $2,624 in 2024 (World Bank, 2025). Given these achievements, it achieved lower-middle-income status in 2015. While these financial advancements position Bangladesh among the fastest-growing economies, the country still lags in several qualitative global indices, such as gender inequality and the Human Development Index (HDI). In 2022, Bangladesh ranked 127th in gender inequality and 130th in HDI (UNDP, 2024).

To ensure sustainable economic growth and achieve upper-middle-income status by 2031, Bangladesh must optimize the utilization of male and female labour forces. However, in a predominantly male-dominated society, social and economic barriers often prevent women from accessing and utilizing financial resources, pressuring them to remain at home and focus on child-rearing (Alam et al., 2025). Despite an increasing trend in women’s labour force participation, their involvement remains significantly lower than that of men. Moreover, most employed women occupy lower or mid-level positions, primarily in the ready-made garments industry, factories, and small and medium businesses. The corporate boardrooms and TMTs remain primarily male dominated. To equip with diversified skills, knowledge, and experience, firms should prioritize female participation in the governance and management team to enhance firm performance, ultimately contributing to national economic growth.

Recognizing the importance of gender diversity in corporate boardrooms, many countries promote women’s participation, with some even mandating gender quotas (Biswas et al., 2023). For example, Norway, the UK, and Spain require publicly listed companies to have at least 40% female board members (Saima and Arefin, 2022). In South Asia, countries like Malaysia, India, and Pakistan have enacted laws mandating that public companies appoint at least one female board member (Terjesen et al., 2015; Dey et al., 2023). The 2018 Corporate Governance Code of Bangladesh recommends that the Nomination and Remuneration Committee develop a policy on board diversity, considering factors such as age, gender, experience, and background. However, the code does not stipulate specific minimum requirements for female directors, thereby hindering substantial progress in achieving gender diversity on corporate boards, as many companies still lack female representation (Dey et al., 2023).

Despite the absence of legislative mandates, female board representation in publicly listed banks has reached 18% (International Finance Corporation, 2024). Our study finds that among the top 100 firms listed on the DSE, 16.10% of board members are women. Historically, gender diversity on boards in Bangladesh was among the lowest in Asia-Pacific, with only 3.6% then (Davies, 2011). However, the increasing trend in board gender diversity aligns with global developments. Nevertheless, despite this progress, women remain underrepresented in decision-making roles. Moreover, women’s representation on corporate boards is potentially prevalent in family-owned firms (Dey et al., 2023). Female board members often come from the networks of male board members, such as spouses, children, relatives, and close associates, which can limit their ability to exercise their authority and responsibility in strategic decision-making. Given this context, our study aims to investigate whether board gender diversity significantly impacts gender diversity in top management teams within publicly traded firms in Bangladesh. Additionally, we examine whether women on corporate boards function merely as “tokens” or whether their presence triggers a “trickle-down” effect on selecting management teams.

Gould et al. (2018a, b) examine the effects of board gender diversity on women’s representation in the TMT, a phenomenon referred to as the “trickle-down effect.” This effect suggests that greater gender diversity at the corporate board level fosters increased gender diversity at lower organizational levels. They stated, “The trickle-down effect provides an exciting opportunity for organizations to initiate increases in female representation at a senior level to improve female representation at the level immediately below. Appointing women at a senior level may be the lever needed to increase female appointments at the level of management immediately below, which in turn will improve gender diversity throughout the organization” (Gould et al., 2018b, p. 932).

Prior studies have found a positive relationship between BGD and gender diversity in TMT, though such studies remain limited in the context of developed countries. Evidence of a strong association between the number of women on company boards and the number of women in TMTs is observed in the U.S. (Bilimoria, 2006). To examine the significance of the trickle-down effect of BGD on management gender diversity, this study considers additional theoretical lens, including signaling effects (Bergh et al., 2014), the similarity-attraction paradigm, the homophily concept (Byrne, 1971; Kossinets and Watts, 2009), and women’s agentic roles (Ali and Konrad, 2017; Bilimoria, 2006).

Signalling theory, introduced by Spence (1973), posits that under conditions of uncertainty, incomplete information, and asymmetric knowledge distribution, observable characteristics function as signals to decision-makers regarding less observable attributes and potential outcomes (Bergh et al., 2014). Different signals influence decision-makers' responses based on variations in information asymmetry. Observable characteristics linked to credibility signal decision-makers that they can make informed choices that enhance goal attainment.

The application of signalling theory to the trickle-down effect suggests that the presence of female board members or top management executives serves as a signal to stakeholders regarding the firm’s underlying values, including its internal culture, commitment to gender diversity, and organizational processes (Hillman et al., 2007; Martín-Zamora et al., 2024). Bilimoria (2006) argues that female directors signal to employees, investors, and other stakeholders the existence of a corporate culture that supports women’s careers and professional advancement. She stated, “These signals enhance self-selection and retention of women top managers in the organization with such leadership and encourage male executives to advance and retain talented women in the senior management ranks” (Bilimoria, 2006, p. 49). A notable female presence on the corporate board signals a firm’s commitment to gender equality (Georgeac and Rattan, 2019).

To further explain the trickle-down effect, this study incorporates insights from the similarity-attraction paradigm in psychology and homophily concepts in sociology. The similarity-attraction paradigm and homophily concept suggest that individuals work, associate, and form relationships with others with similar characteristics, values, and beliefs (Byrne, 1961, 1971; Ibarra, 1993; Kossinets and Watts, 2009). The similarity-attraction paradigm states that shared attributes influence attraction among individuals, and that attraction strengthens as similarities increase (Byrne, 1971). Therefore, individuals with demographic, personality, social status, and value-based similarities are likelier to establish stronger relationships (Tsui et al., 1992). This theory explains why women on corporate boards or in senior leadership roles may be more inclined to support and mentor other women, thereby reinforcing gender diversity at multiple levels within the organization (Kurtulus and Tomaskovic-Devey, 2012).

The homophily principle further suggests that individuals form professional and social networks with others with similar sociodemographic, behavioural, and interpersonal attributes, such as education, profession, age, gender, and religion (McPherson et al., 2001). Women in board and senior management positions are more likely to prefer working with and advocating for other women (Kanter, 1977b; Srivastava and Sherman, 2015). Even in the absence of direct advocacy, the mere representation of women at senior levels signals to prospective female employees that the organization values gender diversity, thereby enhancing career advancement opportunities for women (Hillman et al., 2007). This dynamic increases the likelihood of female candidates applying for leadership positions. Consequently, the similarity-attraction paradigm and the homophily principle predict a cascading effect, where gender diversity at higher levels promotes advocacy and positive signalling to prospective female candidates.

Ali et al. (2021, p. 9) assert that “a senior women’s agency perspective theorizes that when leadership teams include more women, their decisions reflect attention to a broader range of stakeholder groups, including women themselves.” Women play a crucial role in eliminating gender-based barriers to career advancement, and female directors or senior executives can act as change agents to improve gender diversity (Jensen and Meckling, 1976; Cohen and Huffman, 2007). Prior studies demonstrate that women in leadership positions facilitate the career progression of other women within their organizations. For instance, female board chairs tend to appoint more women to board positions than their male counterparts (Brieger et al., 2019). Additionally, female board representation enhances female participation in TMTs (Dezsö et al., 2016), reduces gender segregation (Huffman et al., 2010), and helps narrow the gender pay gap (Cohen and Huffman, 2007).

Qualitative studies further corroborate the role of women’s agency through both direct and indirect advocacy. Female board members in the U.S. often engage in gender advocacy efforts, including mentorship programs, strategies to overcome workplace barriers, and initiatives to promote gender diversity (Konrad et al., 2008). Additional evidence suggests that female directors contribute to gender diversity by influencing recruitment, selection, and promotion processes, supporting female applicants, reducing gender inequities, mentoring female managers, and establishing and monitoring gender diversity targets (Kirsch, 2022).

Kanter (1977a) introduces the core concept of critical mass theory, which posits that demographic composition within groups both reflects and reinforces structural inequalities. A critical threshold of women’s participation is necessary to influence group dynamics and decision-making meaningfully. To fully realize the benefits of women on corporate boards and mitigate the glass ceiling effect, a critical mass threshold must be reached (Kanter, 1977b; Konrad et al., 2008; Torchia et al., 2011; Gyapong et al., 2021; Martín-Zamora et al., 2024). Research suggests that having at least three women on corporate boards reduces tokenism and enables women to actively participate and influence board decisions. Kanter (1977b) emphasizes the importance of numerical representation in group decision-making and classifies groups into four categories based on gender composition: uniform, skewed, tilted, and balanced. Kanter (1977a) argues that when women comprise 20%–40% of a group (tilted) or 40%–60% (balanced), they can significantly influence decision-making. This classification suggests that token female board members struggle to assert influence until their representation reaches a critical mass.

The core concept of the trickle-down effect suggests that “diversity begets diversity” (Cook and Glass, 2015). It posits that women’s participation at the top level enhances women’s representation at the immediate lower levels, spilling over to all levels of the organization (Gould et al., 2018b) and trickling down gender diversity throughout the firm. This concept is supported by the similarity-attraction theory (Byrne, 1971), signalling theory (Spence, 1973, 2002), and agency theory (Jensen and Meckling, 1976), all of which suggest that women in leadership positions tend to promote other women through advocacy, mentorship, and sponsorship (Gould et al., 2018a; Guldiken et al., 2019). Female participation at the top-level signals that firms value and support female leadership and gender diversity (Stainback et al., 2024). Additionally, the homophily principle implies that women in senior positions are better positioned to identify and recruit other qualified female candidates for managerial roles, both from within and outside the firm. This dynamic enables female directors and senior executives playing advocacy roles for other women to get access to suitable female candidates through their networks (Ibarra, 1993). Moreover, the female director’s agentic role acts as an instrument to improve female positioning at upper levels and recruitment at different levels.

Empirical studies provide evidence that women on corporate boards contribute to increasing female representation at the management level supporting the trickle-down effect (Ali et al., 2021; Gould et al., 2018a). Additionally, literature finds a positive trickle-down effect of board gender diversity on corporate hierarchies (Stainback et al., 2024; Skaggs et al., 2012; Bilimoria, 2006; Cohen et al., 1998). Women’s presence on boards and in senior management can benefit female employees at lower levels, particularly in terms of self-perceived career opportunities, performance evaluations, and reward distributions, reinforcing the similarity-attraction and homophily principles (Tate and Yang, 2015; Cook and Glass, 2015). Moreover, female representation on corporate boards contributes to fostering a gender-equitable leadership culture and a more inclusive work environment, which facilitates the recruitment and promotion of women into top management positions (Bilimoria, 2006). More women on boards also sends a positive signal to prospective female job candidates, increasing their likelihood of applying for managerial positions (Ali et al., 2021). Based on these theoretical foundations and empirical evidence, the following hypothesis is proposed:

Critical mass theory suggests that female directors reaching a threshold of three enables them to significantly influence board decisions (Kanter, 1977a; Kristie, 2011; Gyapong et al., 2021). Kanter (1977b) and Konrad et al. (2008) argue that the benefits of female directors may remain unrealized unless a critical mass is achieved. Supporting this, Konrad et al. (2008) find that a female director describes how female numbers play a role on the corporate board: “The stage with one woman is the invisibility phase. The stage with two women is the conspiracy phase: if the women sit next to each other and go to the ladies’ room together, the guys wonder what the women are up to. Three women are mainstream–it is normal to have women in the room, and those questions go away” (Konrad et al., 2008, p. 146).

Aligning with the concept of this theory, prior studies observe the positive association between firm value and gender diversity with three or more female board members (Liu et al., 2014; Nadia et al., 2024). Torchia et al. (2011) support the critical mass effect by drawing an association between increased females on corporate boards and firm innovation. Prior studies identify the critical mass effect in various firm-specific outcomes, such as firm performance (Joecks et al., 2013; Liu et al., 2014), corporate social responsibility (CSR) disclosure (Ben-Amar et al., 2017), dividend policy (Gyapong et al., 2021), and earnings quality (Strydom et al., 2017). Additionally, research indicates that achieving a critical mass of at least three female board members significantly enhances women’s representation in senior management (Biswas et al., 2023; Gould et al., 2018b; Ali et al., 2021). Kristie (2011, p. 22) echoes this sentiment, stating, “One woman on the board is a token, two is a presence, and three is a voice.” Based on the underpinnings of critical mass effect theory and the outcomes of empirical studies, this study postulates the second hypothesis in the following way:

Our study initially considers the top 100 firms listed on the Dhaka Stock Exchange (DSE) in Bangladesh based on market capitalization as of July 15, 2023, covering 16 different sectors. The study spans the period from 2018 to 2022. After excluding ten firms that were either listed after 2021 or did not disclose information regarding the gender diversity of management, our final sample comprises 90 listed firms. Due to the unavailability of annual reports and missing data, we eliminate 60 firm-year observations, resulting in a final sample of 390 firm-years. Table 1 presents the sample selection process. The study relies on annual reports from the sampled companies to gather hand-collected data on dependent, independent, and control variables.

We employ ordinary least squares (OLS) regression as our primary model to test our hypotheses. To analyze the effect of board gender diversity on gender diversity within the senior management team, we estimate the following empirical model:

We use two alternative proxies to measure women’s representation in TMT. Thus, the dependent variable in the model is either WOMMCDUM or WOMMC. WOMMCDUM is a binary variable that equals one if at least one member of the TMT is female and zero otherwise. WOMMC represents the proportion of female members in the senior management team. Given the variation in TMT disclosures across industries, we also consider the management committee or leadership team as part of the TMT. The explanatory variable BGENDIV is used to test our hypotheses. To examine Hypothesis 1, we use the proportion of female directors on the board as a proxy for board gender diversity (BGENDIV). For Hypothesis 2, we use dummy variables indicating the presence of one woman (1WOMAN), two women (2WOMEN), or three or more women (≥3WOMEN) in the boardroom.

Among the control variables, LNBSIZE represents board size and is measured as the natural log of the total number of board members. BINDP reflects board independence, calculated as the proportion of independent directors to the total number of directors. We also consider the firm size (FSIZE) calculated by the natural log of total assets as larger firms face greater pressure to conform to social conventions and diversify their board membership by gender. Biswas et al. (2023) find a positive association between gender diversity in management teams and business performance and leverage. We include an accounting-based financial performance measure (ROA) measured by net income to total assets. Leverage (LEV) is measured by dividing total debt by total equity. We also control the firm’s age (LFAGE), computed by the natural log of years since its inception, representing its operational experience (Biswas et al., 2023; Hillman et al., 2007). To account for potential variations over time, we include year dummy variables. Additionally, we incorporate industry indicator variables to control for possible industry-specific effects. Details of the variables can be found in  Appendix.

Descriptive statistics of all variables are demonstrated in Table 2. To assess executive gender diversity, 40.5% of firms have at least one female member on their team, while the overall percentage of female executives in top management teams is 6.7%. Female representation in management teams in Bangladesh is significantly lower than in developed countries like the United Kingdom, which has 18% (Biswas et al., 2023), and Australia, which has 29.64% (Ali et al., 2021). Even developing countries like Indonesia have higher representation, with 13.3% (Siregar et al., 2024). To measure the diversity of corporate boards, we found that, on average, 16.1% of corporate board members are female in Bangladeshi firms. Das et al. (2024) also find that 13.5% of directors in the banking industry are female. The representation of females is slightly higher than that of India, with 14.8% (Maji and Saha, 2021). Firms’ board have one female member at 26.7%, two female members at 23.1%, and at least three female members at 23.6%. The average board size is ten members, of which 24.1% are independent. The firm size is 10.68 in terms of the log of total assets, while the ROA is 5.1%. Firms are highly leveraged, with an average debt-to-equity ratio of 6.23 times, and the average age of the firms is 3.30 in terms of the logarithm of the number of years since incorporation.

Table 3 presents the pairwise correlations between WOMMCDUM and various continuous variables. The highest correlation between WOMMCDUM and WOMMC is 0.8, and these pairs do not appear in the same regression model as they are alternative measures of female diversity in executive top management. All pairwise correlations among the explanatory variables are well below of ± 0.80 thresholds recommended by Gujarati and Porter (2003), indicating that multicollinearity is not a concern in the models. Furthermore, the variance inflation factor (VIF) test (not tabulated) confirms this, with all VIF values for the explanatory variables remaining below 10.

Table 4 presents the baseline regression results between BGD and gender diversity in TMT. Columns 1 and 2 present the results from logistic regressions estimating the likelihood of having at least one female in the top executive management team (coded as 1) versus having no female executive management team (coded as 0), based on the proportion of women on the board. In column 1, the odds ratio for BGENDIV is 3.112, indicating that for each one-unit increase in the proportion of female board members, the odds of having a woman in the executive management team increase by a factor of 3.112. Moreover, the odds ratio for BGENDIV is increased to 3.498 in column 2 when considering the time and industry fixed effects. These findings supporting Hypothesis 1 show that a higher representation of women on the board increases the probability of appointing women to the TMT. We then analyse the relationship between the proportion of women on the board of directors and the proportion of women in the top executive management teams. The findings in columns 3 and 4 align with the results from the logistic regression models. In column 3, BGENDIV (β = 0.147, t = 3.81) positively associates with the WOMMC variable and is significant at the 1% level. In column 4, after accounting for year and industry effects, BGENDIV (β = 0.116, t = 2.33) remains significant at the 5% level, though the coefficient is smaller compared to column 3. These results also confirm Hypothesis 1. Among the control variables in the logistic regression, both firm size (FSIZE) and firm age (LFAGE) are negatively associated with WOMMCDUM, while leverage (LEV) shows a positive association. In OLS regressions, board independence (BINDP), firm size (FSIZE), and firm age (LFAGE) are negatively associated with WOMMC, while leverage (LEV) shows a positive association.

We apply a similar approach to prior literature (Biswas et al., 2023; Gould et al., 2018b; Ali et al., 2021; Joecks et al., 2013; Liu et al., 2014) to examine the concept of tokenism versus critical mass in the context of BGENDIV. In this case, we substitute our primary independent variable (BGENDIV) with three binary variables: 1WOMAN (indicating the presence of one woman), 2WOMEN (indicating two women on the board), and ≥3WOMEN (indicating three or more women on the board). Table 5 presents the results of this analysis, focusing on tokenism versus critical mass in relation to BGENDIV and gender diversity in TMT. The coefficients for one and two women directors are insignificant (columns 1 and 2) in the logistic regression model using WOMMCDUM as a binary dependent variable. However, they have significant adverse effects at the 10% and 5% levels in columns 4 and 5, respectively, when using WOMMC as a continuous variable in the OLS models. This suggests that having just one or two women on the board does not significantly improve gender diversity in senior management. This could reflect tokenism, where the presence of one or two women does not lead to meaningful changes. When there are three or more women on the board in columns 3 and 6, the likelihood of having a female senior manager and the proportion of women in senior management increase significantly. This supports the idea of a “critical mass”, where the presence of a larger group of women leads to a more substantial and positive impact on gender diversity in senior leadership. The outcome espouses Hypothesis 2 and supports the critical mass theory, suggesting that boards with three or more women directors are more likely to promote gender diversity in senior management, while having just one or two women may not be enough to drive significant change.

The potential issue that can influence our results is the endogenous relationship between BGD and female diversity of TMT due to observable heterogeneity bias. We apply a propensity score matching (PSM) approach to minimize observable heterogeneity, resulting in endogeneity concerns. The process begins by treating BGD as a dummy dependent variable, with firms with at least one female director in the treatment group and those without any female board member in the control group. In the first stage, logistic regression is performed using the same set of control variables used in the baseline model to generate propensity scores for each firm-year observation. We use the same control variables in the first- and second-stage regressions to ensure a balance of matched samples between the treatment and control groups. In the subsequent phase, these scores are used to create nearest neighbour-matched pairs for the BGD indicator variable. We use the caliper matching method with a caliper of 1%. We can manage 198 firm-year observations, and the regression results are shown in Table 6. Panel A reports the results of the first-stage logistic regression, Panel B shows the matching firms with at least one female board member and those with no female board member based on the controls used in the first-stage regression. Table 6, Panel C, presents the second-stage regression results using PSM samples. The results are qualitatively similar to those in Tables 4 and 5.

Although the PSM approach addresses endogeneity arising from observable heterogeneity bias, this study also utilizes the two-stage least squares (2SLS) regression method to address another potential source of endogeneity, reverse causality. Prior research has also found the bottom-up effects of corporate gender diversity, indicating that greater gender diversity in lower management may positively influence gender diversity in top management (Ali et al., 2021; Gould et al., 2018b). Thus, it is plausible that higher gender diversity in the TMT can influence boardroom diversity, raising the potential for reverse causality in this empirical setting.

To mitigate this concern, we employ the instrumental variable approach. Following prior literature, we use the industry average of BGD (BGENDIV_IND) and the one-year lag of BGD (LAGBGENDIV) as instrumental variables (Usman et al., 2019; Gould et al., 2018b). Table 7, column 1 shows that both LAGBGENDIV and BGENDIV_IND are significantly positive with BGENDIV at the 1% level, and in columns 2 and 4, BGENDIV_PRED has remained significantly positive with both WOMMCDUM and WOMMC at the 1% level. These results continue to be consistent with our baseline result in Table 4. To support the concept of critical mass theory, we also re-run the 2SLS regression using ≥3WOMEN_PRED as the explanatory variable. The results in columns 3 and 5 indicate a positive and statistically significant relationship between having more than three female members and both WOMMCDUM and WOMMC at the 1% significance level. The finding also supports our baseline result in Table 5. Moreover, the under-identification test (LR statistic) and the weak identification test (Cragg-Donald F statistic) justify the validity of the chosen instruments across all the models.

To ensure the robustness of the study, we also consider two alternative measures for both BGD and gender diversity in TMT, in line with prior literature (Xie et al., 2020; Biswas et al., 2023). These measures are BLAU and SHANNON for female diversity on the board, and WOMMC_BLAU and WOMMC_SHANNON for female diversity in the management committee (see  Appendix for definitions). Panels A and B in Table 8 present the regression results using these measures, which are qualitatively like our baseline outcomes in Tables 4 and 5.

Board gender representation, particularly in emerging economies, is gaining attention as part of a broader push toward gender equality and diversity in corporate governance. This study examines how BGD contributes to executive gender diversity, focusing on the unique challenges and implications for emerging economies like Bangladesh. Using 390 firm-years of data from publicly listed firms in Bangladesh between 2018 and 2022, we find a positive and significant association between BGD and gender diversity in TMT using both logistic and OLS regression models. This association remains robust across multiple tests, including those addressing critical mass theory, endogeneity concerns (using 2SLS and PSM), and alternative measures of board and management gender diversity. These findings align with the results of Biswas et al. (2023), Delgado-Piña et al. (2020), Gould et al. (2018a), and Bilimoria (2006). BGD may foster the inclusion of women in line management roles, which are crucial for leadership progression. Female board members serve as role models, inspiring other women to pursue executive positions while providing mentorship, guidance, and networking opportunities. Additionally, diverse boards promote a culture that supports gender equality and reinforces a commitment to diversity within the organization.

Gender diversity at the executive level is expected to create a ripple effect throughout the organization. Female directors serve as inspiring role models for other women, fostering support through advocacy, mentorship, and a commitment to uplifting their female colleagues. Therefore, gender diversity in executive management may have a favourable impact on firms' financial and non-financial performance. Haque et al. (2024) find that women in executive roles demonstrate a greater focus on community engagement, ethical considerations, and societal well-being. They also play a crucial role in shaping corporate responses to climate challenges by influencing policymaking, carbon reduction strategies, and the adoption of energy-efficient solutions. Similarly, Opstrup and Villadsen (2014) report that gender diversity within top management teams enhances financial performance, mainly when organizational structures support the integration and autonomy of executives.

Women’s representation on corporate boards fosters a gender-equity leadership culture, creating a supportive environment for women’s career advancement (Bilimoria, 2006). It facilitates the recruitment and promotion of female employees to top management positions. Additionally, having more women on the board signals a commitment to inclusivity, encouraging both current and prospective female job candidates to apply for managerial roles (Ali et al., 2021). Ultimately, this enables senior female managers to engage more actively in strategic operations, including coordination, implementation, reporting, and oversight (Haque et al., 2024) while enhancing corporate reputation (Martín-Zamora et al., 2024).

This study contributes to both theoretical development and policy discussions. First, the findings reinforce the trickle-down effect, aligning with signalling theory, homophily, and the similarity-attraction paradigm. Gould et al. (2018b) argue that increasing female representation in senior roles strengthens gender diversity within organizations by signalling a firm’s commitment to inclusivity. Female leadership at the board level reflects an organization’s internal culture and stance on gender diversity (Hillman et al., 2007). Similarly, Bilimoria (2006) underscores the importance of female board members in promoting gender diversity within TMT, suggesting that firms should prioritize female representation at the board level to foster supportive environments for senior female officers. Biswas et al. (2023) also emphasize that increasing female board appointments can address the underrepresentation of women in senior management and develop a pipeline for future CEOs and board members.

In line with agency theory, women play a crucial role in overcoming gender barriers that hinder career advancement. Female directors and senior executives, when motivated, can act as change agents to improve gender equality in corporate leadership (Cohen and Huffman, 2007). Kanter’s (1977a, b) research suggests that tokenized women may lack the influence or motivation to support other women. Our findings support critical mass theory, as women’s access to senior management increases significantly when at least three female directors are present on the board, compared to firms with only one or two female directors. This provides a nuanced theoretical perspective on the trickle-down effect through the lens of critical mass theory. Similar findings have been reported by Ben-Amar et al. (2017), Gyapong et al. (2021), and Liu et al. (2014), confirming the impact of critical mass in different country settings.

Secondly, the positive association between BGD and gender diversity in TMT suggests that establishing a strong foundation for gender diversity at the executive level can be a powerful strategy for breaking down barriers to gender equality. This study also aligns with the United Nations Sustainable Development Goal (SDG) 5, which emphasizes gender equality and the empowerment of women. Specifically, it highlights the importance of ensuring women’s full and active participation in leadership and decision-making at all levels of corporate governance. By fostering gender diversity in executive roles, this research contributes to advancing gender equality both in Bangladesh and globally.

Finally, this study offers insights for policymakers, regulators, and corporate stakeholders in assessing governance practices, particularly concerning gender diversity and equality. The findings support initiatives aimed at increasing female representation in leadership positions. One key recommendation is the establishment of gender quotas to ensure women’s voices are adequately represented in corporate governance structures. Additionally, gender disparities in leadership can be mitigated through policies that systematically monitor gender representation and ensure that qualified women receive equitable opportunities for board appointments.

This study examines how BGD influences female representation in TMT in Bangladesh. Using a sample of the top 100 publicly listed firms from 2018 to 2022, we construct a panel dataset comprising 390 firm-year observations. The study applies both the ordinary least squares and logistic regression methods to test the hypotheses, addressing potential endogeneity through instrumental variable analysis and propensity score matching. To ensure the robustness of our findings, we also employ alternative measures of BGD and gender diversity in TMT.

Our findings highlight the crucial role of female board members in enhancing diversity within TMT. Companies seeking to increase gender diversity among senior executives and create more supportive environments for their top female employees should focus on improving the representation of women in the boardroom, leveraging the trickle-down effect in aligning with signalling theory, the homophily concept, and the similarity-attraction paradigm. In line with agency theory, female directors serve a monitoring role in fostering gender diversity in executive management. This sends a positive signal to the labour market, demonstrating that companies value women and provide career advancement opportunities, thereby enhancing corporate reputation. Furthermore, our results support the critical mass theory, showing that female directors are substantially influential in promoting gender diversity in management teams, particularly when at least three women serve on the board.

Gender diversity may constitute an intangible asset, and achieving gender balance across organizational levels can enhance employee productivity (Delgado-Piña et al., 2020), increase market value (Sarhan et al., 2019), and establish a legitimate identity of diversity (Gould et al., 2018a). This study offers critical insights for policymakers, regulators, and other stakeholders, underscoring the necessity of policies that promote women’s empowerment and improve their representation in top management and board directorships. Increasing gender diversity on boards can generate broad organizational benefits, positioning it as a pivotal strategy for advancing gender inclusivity.

This study has certain limitations. First, we focus exclusively on the top publicly listed firms on the Dhaka Stock Exchange, excluding non-listed firms. Consequently, our findings may not be generalizable to non-listed firms. Second, our sample is restricted to a single country, which may limit the applicability of our results to other countries with different cultural and governance structures. Third, our study relies on data from annual reports, meaning the accuracy of these reports directly affects the reliability of our conclusions. Disclosure of detailed TMT in annual reports is generally limited and inconsistent across industries, which limits our sample size. Observational and interview-based research on women in corporate boardrooms could provide valuable insights into ethics and governance, particularly regarding how female directors influence the appointment of women to senior management positions.

Despite these limitations, this study is the first to examine the relationship between BGD and women’s presence in TMT in an emerging economy such as Bangladesh. Future research should build upon these findings to provide a more comprehensive understanding of the topic, with our results serving as a foundation for further investigation.⁹