Female representation on the boards of directors of non-financial companies

Zyad Marashdeh,Ahmad Alkhataybeh,Mohammad Khataybeh,Mohammad W Alomari

doi:10.22495/jgrv10i2art4

Zyad Marashdeh, Ahmad Alkhataybeh + Show 2 more

Open Access

https://doi.org/10.22495/jgrv10i2art4

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Abstract

This study offers new insights to help improve our understanding of the impact of female representation on firm performance, as measured by return on assets (ROA) and return on equity (ROE) and using non-financial institution data from Jordan. The study utilizes a lagged dependent variable in the regression models by employing the generalized method of moments (GMM) for dynamic panel analysis of the panel data of 77 companies over the period 2008-2018. The results of the regression analysis reveal that leverage, board size, and firm size were positive and statistically significant, while the age of the firm was statistically significant but had a negative effect, which indicates the existence of a relationship between these variables and the performance of Jordanian companies. However, the results fail to show any effect of the impact of female representation on firm performance as measured by return on assets and return on equity. This finding might be attributed to the low representation of females on non financial institution boards, which was only 3.63%, a very low figure compared to that of males on Jordanian boards. Therefore, our results are valid only for Jordanian firms and cannot be generalized to ones in other countries, which might have different cultural and legal perspectives.

Highlights

Corporate governance (CG) has attracted increasing research interest over recent decades, reflecting its fundamental importance for corporate and national economic performance; most CG research has focused on developed countries
This study offers new insights to help improve our understanding of the impact of female representation on firm performance, as measured by return on assets (ROA) and return on equity (ROE) and using non-financial institution data from Jordan
We failed to find any relationship between female representation on boards and firm performance using both ROA and ROE measurements

Summary

Introduction

Corporate governance (CG) has attracted increasing research interest over recent decades, reflecting its fundamental importance for corporate and national economic performance; most CG research has focused on developed countries. With the universal preponderance of neoliberalism in the political economies of both developed and developing countries since the 1980s, CG practices have often been transported wholesale to unfamiliar contexts, with varying degrees of success. This indicates a need for studies on such adoption (Aintablian & Boustany, 2008). The BoD is responsible for CG (Kim, 2005; Hundal & Eskola, 2020; Fania, Yan, Kuyon, Sesay, & Ntsama, 2020), and the CG infrastructure is designed to guide firm strategy, with the board, which is accountable to shareholders, effectively monitoring management (OECD, 2004)

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