Board gender diversity as a CSR tool and financial performance in China

Abstract

Using multivariate approach, this study investigates the effect of female representation on boards on the practice of corporate social responsibility (CSR) and financial performance in China. Results of fixed effects models show that the relationship between female directors and CSR, CSR and Tobin’s Q, and female directors and Tobin’s Q are positive. These findings support the upper-echelon and stake holder theories. The results suggest that firms, with gender diverse boards, are more likely to outperform other firms in the areas of social and financial performance. An implication for society and government might be to enact policies and incentives as well as adopt moral suasion as a means to encourage firms, irrespective of size, to embrace gender diversity through increased female board representation, as it could prove to be a veritable CSR tool to boost their public image, long run performance, and benefit society.