Directors’ Interlock, Gender Diversity and Firm Performance: A Panel Data Approach

Abstract

In the recent era, along with the developed economy, women empowerment becomes a key agenda of sustainable development in a developing economy also. Their involvement in every sector of the economy becomes a significant social agenda. The mandatory participation of women in the corporate board, according to the Indian Companies Act 2013, turns into a debatable issue and becomes a true interest among policymakers as well as researchers. In this juncture, this study tries to analyze the impact of women director on the value of the Indian corporations. Along with gender diversity of the board, the proportion of executive directors, the busyness of executive directors are considered as the explanatory variables of the study. Size of the board, number of board meeting held, size of the firm and growth of the firm are considered as control variables. On the other hand, Tobin's Q, a market-based performance measurement and ROA, an accounting based performance measurement are taken as the response variables. The basic intention of this paper is to explore the relationship between corporate board characteristics and firm performance and it has been assessed through panel data regression model by taking 78 listed Indian companies from BSE – 100 for the period of 9 years (2008–2016). Statistical analysis of the study spells out that the women representation enhances the knack of the corporate board to influence the firm value in a positive manner. Whereas by supporting the agency theory, multiple directorships by executives play a depressing role in value creation for the firms.