Abstract
Although the relationship between board gender diversity and a firm’s financial performance has been investigated before, the current study provides a valuable contribution by exploring the complex phenomenon of the mediating impact of corporate social responsibility (CSR) performance on a firm’s financial performance. The current study aims to explore whether corporate social responsibility (represented by the proxy variable of CSR reporting) mediates the relationship between boardroom gender diversity and firm performance. We use the pooled ordinary least square (OLS) regression to examine the above relationship by using data from 2008 to 2015. To control the likelihood of endogeneity we also use one-year lagged and two-stage least square (2SLS) regression models. Our results show that boardroom gender diversity is significant, positively correlated with firm performance, and CSR fully mediates the relationship between boardroom gender diversity and firm performance. In addition, four control variables (independent director, Chief executive officer (CEO power), board member meeting frequency, Big4, and leverage) have some influence on firm performance. These findings hold for a set of robustness tests. Our findings have the implication for the investors and regulators. For investors, our results show that the existence of female directors on the board can improve the firm performance. For regulators, our results advise the worldwide policy maker to give the importance to boardroom gender diversity. The paper contributes to the existing studies, by pioneering the investigations of the mediating role of CSR in the relation between boardroom gender diversity and firm performance in Chinese context.
Highlights
Corporate social responsibility (CSR) is a broad concept that entails sustainability accounting as well as sound corporate governance practices
The current study investigated the impact of boardroom gender diversity on firm performance and extends the mediating role of CSR on the relationship between boardroom gender diversity and firm performance by using 4257 firm-year observations ranging from 2008 to 2015
Our findings show that boardroom gender diversity had a significant impact on firm performance
Summary
Corporate social responsibility (CSR) is a broad concept that entails sustainability accounting (social and environmental) as well as sound corporate governance practices. According to Carroll [13] and Friedman [14], in developed markets, CSR is considered to be a duty and a demonstration to stakeholders that the company is a legitimate social entity, whereas in countries like China, which is developing, it is considered as a business tactic and used to gain or maintain market share It is done for improving the company’s brand (image) and is used to increase financial performance and shareholders’ wealth. Past literature has considered the impact of gender diversity on Chinese listed companies’ financial performance [35,36,37], our research explores this relationship from a unique angle related to the mediating impact of CSR performance on a firm’s financial performance in the presence of gender diversity at the board level. The remainder of the paper is organized in different sections, which are: Section 2 shows the theory and hypotheses development; Section 3 relates to research design; Section 4 describes the empirical findings; and the last section, Section 5, provides conclusions with implications for further research
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