Abstract
The aim of this study was to examine the effect of gender diversity on the financial performance of insurance firms in Kenya. The study analyzed data from the 55 insurance firms licensed by the Insurance Regularity Authority (IRA) in Kenya. Gender diversity was operationalized by the number of female directors serving on the boards of insurance firms operating in Kenya. Primary data was collected from a sample of 412 board directors, Chief Executive Officers (CEOs), Chief Finance Officers (CFOs), Audit Committee members (AUDIND) and Internal Auditorsusing a questionnaire instrument while secondary data was retrieved from audited financial reports of the year 2017. Data were analyzed using descriptive and inferential statistics. Firm performance was measured by the two accounting-based measures Return On Assets (ROA) and Return On Equity (ROE). The findings from the regression analysis indicate that gender diversity significantly and positively affects the financial performance of insurance firms in Kenya.
Highlights
Board diversity has become an important variable in corporate governance in recent times with a number of empirical studies seeking to investigate its impact on firm performance (Rose, 2007)
While the authors found the average effect of gender diversity of firm performance to be negative, the findings revealed that: (a) Diverse boards spent more effort the monitoring activities; (b) The turnover of Chief Executive Officers (CEOs) of more diverse boards were found to be more sensitive to stock performance; and (c) Companies with more diverse boards showed higher equity-based compensation for directors
This study examined the effect gender diversity on the performance of insurance firms in Kenya
Summary
Board diversity has become an important variable in corporate governance in recent times with a number of empirical studies seeking to investigate its impact on firm performance (Rose, 2007). A number of variables are commonly highlighted, among them ethnicity, age, geography, education, gender, independence, skills, expertise and experience (Fraga & Silva, 2012) In some countries such the United States of America (USA), the definition of board diversity includes variables such as presence or absence of ethnic groups such as African Americans, Asians and Hispanics in the board (Carter, Simkins & Simpson, 2003). Such definitions of board diversity are, influenced by moral and social rationale rather than economic or business rationale according to Fairfax (2011).
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