This paper examines the impact of gender diversity on board effectiveness and corporate performance. Using a large panel of data on publicly-traded firms from 1996 to 2003, the authors find that female directors have a significant positive effect on board governance. Specifically, female directors are less likely to have attendance problems, and their presence leads to better attendance behavior among male directors. Boards with more gender diversity also have more performance-based incentives and more board meetings. However, the positive relationship between corporate performance and gender diversity is not robust to addressing endogeneity issues. The average effect of gender diversity on market valuation and operating performance appears negative, driven by companies with stronger shareholder rights. The results suggest that diverse boards are tougher monitors, but mandating gender quotas may reduce board effectiveness in well-governed firms where additional monitoring is counterproductive.This paper examines the impact of gender diversity on board effectiveness and corporate performance. Using a large panel of data on publicly-traded firms from 1996 to 2003, the authors find that female directors have a significant positive effect on board governance. Specifically, female directors are less likely to have attendance problems, and their presence leads to better attendance behavior among male directors. Boards with more gender diversity also have more performance-based incentives and more board meetings. However, the positive relationship between corporate performance and gender diversity is not robust to addressing endogeneity issues. The average effect of gender diversity on market valuation and operating performance appears negative, driven by companies with stronger shareholder rights. The results suggest that diverse boards are tougher monitors, but mandating gender quotas may reduce board effectiveness in well-governed firms where additional monitoring is counterproductive.