Abstract
This study seeks to explore the significance of board gender diversity and its impact on the financial performance of the manufacturing and service companies listed on the Amman Stock Exchange (ASE) between 2013–2018. Prior studies have determined several benefits of female presence in the boardroom. However, gender diversity’s impact on financial performance is still unclear due to the mixed findings regarding this relation. In addition, studies about gender diversity roles in Jordanian companies’ performance are missing in the literature. Hence, in order to fill this gap, data from the listed companies was extracted from the ASE website with a total sample of 1088 companies as follows: 294 manufacturing companies (27%) and 794 service companies (73%). The results showed more males (96.2%) than females (3.8%) on the board of directors among the listed manufacturing and service companies. The manufacturing and service companies reported a mean Tobin’s Q value of 1.044 (SD = 2.164) and 1.304 (SD = 3.554), respectively. Results show that the linear regression shows that board gender diversity has a statistically significant impact on Tobin’s Q (p = 0.043) and ROA (p = 0.062). Therefore, there is a need for both the manufacturing and service companies to consider increasing the number of female members on the board for better financial performance
Highlights
The recently published Global Gender Gap Report (World Economic Forum, 2021) has shown some slow but rather steady improvements in recent years with regard to gender diversity
This study was conducted among the selected Jordanian companies based on quantitative methods to satisfy the main research question that is: RQ: What is the impact of gender diversity in the board of directors on financial performance?
There are more males (96.2%) than females (3.8%) on the board of directors in the service and manufacturing companies listed on the Amman Stock Exchange (ASE)
Summary
The recently published Global Gender Gap Report (World Economic Forum, 2021) has shown some slow but rather steady improvements in recent years with regard to gender diversity. The Middle East and North Africa (MENA) region remains the area with the largest gap, Jordan, has shown a rapid improvement in this area as the report showed that Jordan has as many women managers as men. The gender diversity gap is still a major issue in the country as women only participate in 15.6% of the labor force. Patriarchal structure and cultural dogma is another challenge for Jordanian females’ career progress and job opportunities which can hinder the presence of a female on the company’s board of directors (BOD), especially in the male-dominated industry. Different countries, cultures, populations, religions, regimes, ownership structures have all been contributed to this complicated issue (Morris, Sodjahin, & Boubacar, 2021)
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