Previous field studies on the glass cliff hypothesis in corporate settings focused on the Anglo-American context and yielded mixed results. This study analyzes promotion patterns to executive boards in Germany, the country of largest economic power in Europe.

Screening the boards of all 160 firms listed in the German DAX-30, MDAX, SDAX and TecDAX from 1999 to 2014 yields a sample of 75 female executive director appointments; this sample is matched with an equal number of male directors. For two years before and after board members’ appointments, we measure company performance by daily stock prices and annual accounting-based measures.

Results contradict the glass cliff hypothesis: Firms more likely promote women to their boards in times of stability. After the appointment decision, they continue to perform better than their competitors appointing men. Nonetheless, shareholders disapprove of the appointment of women, particularly in times of crises.

By: Myriam Bechtoldt, Frankfurt School of Finance & Management gemeinnützige GmbH, Maximilian Voigt, Frankfurt School of Finance & Management gemeinnützige GmbH, and Christina E. Bannier, Justus-Liebig-University Giessen

You can see the full SSRN paper here