Impact of Women Directors on Corporate Financial Performance-Indian Context

Pradip Kumar Das

doi:10.22158/wjssr.v6n3p320

Abstract

Good corporate governance creates the properly structured board of directors capable of taking independent decisions for the welfare of the company. Women directors or female directors with varied backgrounds and experiences tend to look at problems and solutions from wider perspectives, thereby, diversity in boards has been widely considered as an important contributor to improved decision-making. Against this backdrop, the paper empirically investigates the association between participation of female director on board with the financial performance of corporate, using a sample of 16 listed companies’ board membership in India. The study reflects positive and significant impact of female directors on financial performance in the listed companies. The findings could be scientific basis for Indian company to build the most proper board for themselves and contributes to the existing literature through the empirical evidence with more insight into the effect of corporate governance, particularly female directors on firm outcomes from a typical developing country, India. Thus, it is suggested that Indian companies should think about the femininity on board and in senior management to improve financial viability and performance to achieve sustainable growth.

Highlights

Corporate governance refers to collective responsibility of all the directors as well as senior management in attaining the goal of the company
Having more female member on board, corporate would have better financial viability and social outreach. Few corporate expressed their desire to have a woman board member solely to comply with the provision of the Indian Companies Act, 2013 [Section 149 (1), Provision 2]
It can be inferred that women affect the corporate in a positive manner both in managing the social and financial performance to achieve their social mission and growing into sustainable business

Summary

Introduction

Corporate governance refers to collective responsibility of all the directors as well as senior management in attaining the goal of the company. Right selection of the board of directors is essential as they involve in strategic decision making as well as policy formulation of the company in this competitive age (Vishwakarma, 2017). Directors heterogeneity have gained attention among the regulators, practitioners as well as other academicians for effective supervision and to this end, in India, new mandatory provision as per Section 149(1), Rule 11.1 under the Company Act, 2013 was enacted by the Indian Parliament to make all the listed companies compulsory to have at least one woman on the board to realize women contribution for the effective corporate governance as well as removing the flaws of predominance of inequality existing in terms of gender. The mandatory provision in the Companies Act has pushed the researcher to undertake the study whether inclusion of woman on board positively affects the financial performance of the Indian corporate sector. Gender diversity in boards has less conflict and is associated with more strategic control and board development functions (Nielsen & Huse, 2010)

Objectives

Findings

Discussion

Conclusion