Do gender diversity and CEO gender enhance firm’s value? Evidence from an emerging economy

Abstract

PurposeThis paper aims to examine whether and how gender diversity and CEO gender can influence firm value in the emerging market of Pakistan. The study further tests whether these relations vary across state-owned enterprises (SOE) and non-state-owned enterprises (NSOE).Design/methodology/approachThis study considers Pakistani listed firms over the period 2010-2017. The firms have been divided into SOE and NSOE for additional analysis. Tobin’s Q is used to measure firm’s value.FindingsThe authors document that female directors (FDirectors) on corporate boards is positively associated with firm value. The findings also illustrate that female CEOs (FCEOs) enhances a firm value. Additional analyses show that the influence of FDirectors and FCEOs on firm value is stronger in NSOE than in SOE.Practical implicationsThe results suggest that gender diversity and CEO gender play a significant role in corporate decisions. The findings imply that FDirectors discipline the management, reduce agency conflicts and thereby improve corporate governance, resulting in higher firm value.Originality/valueThis study has two important contributions. First, while prior studies mostly based their arguments on using gender diversity of corporate boards, this study shows that a firm performance can be significantly improved if a female serves as a CEO. Second, this study also tests the stated relations for SOE and NSOE and show that gender diversity plays a significant role in NSOE than in SOE.