Affects of Female Directors on Firms Performance in Pakistan

Qaiser Rafique Yasser

doi:10.4236/me.2012.37104

Abstract

This study examined relationship between board gender diversity and its effect on firm performance, based on evidence from the Pakistan. We use empirical data on KSE 100 Index firms observed in 2008 to 2010. Twenty Five percent (25%) of the sample firms have at least one woman in the boardroom and only 3.33% of the CEOs are female. In order to investigate the rapport of gender diversity in board on firm performance, two-stage least-squares estimation used, using Economic Valued Added (EVA) as performance measurement technique. Our results indicate that there is no significant relationship between board gender diversity on firm performance in Pakistan. This implies that the business case for board gender diversity is not supported for this particular sample.

Highlights

Women representation in business management has been the focus of public debates from researchers, policy makers and investors more than 2 decades but in Pakistani context that is a new notion
Our results indicate that there is no significant relationship between board gender diversity on firm performance in Pakistan
These arguments strongly relate to the business case for board gender diversity, which has been investigated empirically in this paper

Summary

Introduction

Women representation in business management has been the focus of public debates from researchers, policy makers and investors more than 2 decades but in Pakistani context that is a new notion. Positive performance effects of board gender diversity imply that a higher ratio of female directors in board will relate to increased firm value, productivity and profitability. Literature implies several reasons for including women members on a firm’s board of directors. According to the Daily, Certo, and Dalton [5] women make 60% of all purchases in the United States and, it is just good business to include women on board of directors. It indicates that female members are sensitive observer of the market and can bring a more realistic approach which can reflect the consumer point of view

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Conclusion