The role of female directors in corporate investment in China

Abstract

This paper investigates the effects of regional market environment and organisational-power environment on the relationship between female directors and corporate-investment efficiency in the Chinese institutional context. Our results show that although a higher proportion of female directors is, in general, associated with a lower level of investment efficiency, both a stronger market environment and a lower power concentration may attenuate the negative effect of female directors on investment efficiency. The association between female directors and investment efficiency is negative and significant in regions with a weaker market environment and in firms with a higher power concentration, but insignificant in regions with a stronger market environment and in firms with a lower power concentration. These findings indicate the importance of considering a regional environment and organisational environment when examining the role of female directors in board governance.