Appointment Of Female Directors Research Articles

Women's participation in corporate management in India and the Companies Act of 2013

This study examines the position of women on the Board of Directors (BOD) of a company and evaluates the laws and practices for appointing female directors on the board of Indian corporations. This paper evaluates “Section 149 (1) of the Indian Companies Act 2013,” which deals with the compulsory appointment of female directors. This study also discusses the female quota system in the context of corporate governance. The study appreciates the steps taken by the government to appoint female directors, which will promote women’s empowerment. This study also discusses the positions of other countries in the world. Furthermore, this study argues that while quota provisions are necessary to achieve gender equality, companies must motivate females for leadership.

Do independent directors inform the share of CSR criteria in executive compensation? Moderating effect of gender diversity

AbstractThis paper extends and enriches the current research on CSR, CEO compensation contracts and characteristics of the board of directors by examining an underexplored question related to the potential impact of independent board members on the share of CSR criteria in executive compensation. It also considers a potential moderating effect of gender diversity in this relationship. Empirical analyses of a sample French firms listed on the SBF120 index between 2014 and 2021 show that independent directors have no impact on the inclusion of CSR criteria in the annual bonus of senior executives. They also reveal that gender diversity can strengthen the role of independent directors in indexing executive compensation to CSR criteria. The findings can be useful for corporate boards and policymakers seeking to boost the adoption of CSR criteria in executive compensation contracts. They provide empirical support for the Zimmermann law (2011) and urge the policymakers to boost the appointment of female directors on boards.

Board gender diversity and firm solvency: Evidence from Scandinavia

AbstractThe implementation of a board gender quota in Norway in 2006 resulted in an extraordinary increase in the number of female directors over a short period of time. As a result, previous studies have used this unique scenario to examine the effects of appointing female directors on various corporate outcomes, such as the cost of debt. Extending this line of research, this study explores whether the appointment of female directors to the boardroom has a significant impact on a firm's solvency. The empirical analysis draws on a sample of firms from Denmark, Finland, Norway and Sweden and implements difference‐in‐differences estimations. The extant evidence is scarce and inconclusive and, more importantly, has been obtained without controlling for endogeneity. Our findings strongly suggest that the solvency of Norwegian firms did not change significantly after the appointment of a large number of female directors. This result is robust to a battery of sensitivity checks.

Making honest men of them: Institutional investors, financial reporting, and the appointment of female directors to all-male boards

In this paper, we theorize that dedicated institutional investors are more likely than transient institutional investors to appoint female directors to investee firms with all-male boards, particularly those with high opacity. We conjecture that dedicated investors appoint female directors as a governance mechanism to improve the financial reporting quality of these investee firms. Specifically, we find that through the appointment of female directors, dedicated institutional investors trigger the release of stockpiled negative accounting information, thereby increasing the likelihood of a stock price crash risk. We also show that dedicated investors, through the appointment of female directors, improve investee firms' corporate disclosure environment by decreasing earnings management. Finally, we find that through continued service on investee firms' boards, female directors reduce the future likelihood of a stock price crash.

Female directors and the firm's cost of debt: Evidence from a quasi-natural experiment

Whereas in 2001 women held around 5% of board seats in Norway, in 2007 their representation increased to more than 40%. This extraordinary change was the result of a board-gender quota regulation enacted in 2006. This study leverages this unique research setting and implements difference-in-differences estimations to investigate whether the appointment of female directors affects the firm's cost of debt. The treated group in the empirical analysis consists of Norwegian public companies affected by the new regulation, while the control group includes similar firms from neighboring Scandinavian countries that were not affected by any gender quota. If, as most previous-related studies conclude, female directors contribute to reduce the cost of debt, such an effect should necessarily be observed in our research setting. However, the results of the empirical analysis show no significant differences in the cost of debt before and after the appointment of a large number of female directors. This result appears robust as it holds across several sensitivity analyses. The implications of this finding for the corporate governance literature are discussed.

Gender diversity in the board room and sustainable growth rate: the moderating role of family ownership

ABSTRACT This study examines the impact of gender diversity on sustainability growth, and moderating role of family ownership in an emerging economy, Pakistan. We employed 3730 firm-year observations, comprising of 307 non-financial firms listed on Pakistan Stock Exchange, over a period 2008–2020. Using framework of agency theory, resource dependence theory and social identity theory, we report that gender diversity results in higher sustainable growth in our sample firms. Further, our results indicate that due to strong identification of family owners with their firms, their presence positively moderates this relationship. Overall, we report that despite of a weak corporate governance mechanism, the presence of female directors and family owners results in higher firm growth and low agency conflicts, which serve as positive signals for the investors. Our study provides empirical support to mandatory appointment of female directors on boards and urge the policymakers to focus on capacity building of female workforce.

Female Directors, Culture and Governance Around the World

The proportion of female directors differs among countries. Drawing on institutional and social role theories, this paper investigates whether national governance quality (NGQ) and national culture (NC) can explain the differences in the appointment of female directors among countries around the world. Using 647 firms from 78 countries over the 2010 to 2017 period, the main findings show that both national culture and governance quality have influence on the appointment of female directors. We find further that the impact of national culture on the presence of women directors is moderated by national governance quality. Finally, the results support institutional and social role theories in terms of explaining the difference in appointment of female directors among countries. Our findings are robust to controlling for endogeneities and alternative measures of culture and female directors.

Gender diversity on boards for organizational impression management: An empirical study of Japanese firms

AbstractThe literature on gender diversity on corporate boards is growing, yet firms' motivation for achieving such diversity remains underexplored. This study examines the potential objective behind appointing female directors that could be driven by organizational impression management based on the hypothesis that firms strategically propose to nominate female directors when they need to form a favorable impression to their stakeholders, especially in relation to executive compensation. This study analyzed annual shareholders meeting agendas for 3585 listed Japanese firms between 2011 and 2020 and found that firms placed female director appointments on the meeting agenda when they needed approval for the revision of executive compensation. This tendency was strengthened for firms with more outside directors. This study's approach and findings contribute to the literature on corporate board gender diversity by suggesting organizational impression management as a potential strategic motivation behind the appointment of female directors.

이사회 성별 다양성과 기관투자자가 기업 가치에 미치는 영향

The amended Act on Financial Investment Services and Capital Markets Act stipulates that listed firms with assets of 2 trillion won or more should have at least one woman on their boards. This study aims to explore the impact of board gender diversity on firm value and the role of institutional blockholders on the relationship. The results are as follows. First, the board gender diversity is positively related to firm value regardless of markets, firm size, industry. Second, foreign blockholders reinforce the positive relationship between board gender diversity and firm value, while domestic blockholders mitigate the relationship. Third, board gender diversity and firm value has an inverted U shape relationship. Firm value increases with the proportion of female directors to a certain level, after which it decreases. The optimal board structure was reached when the ratio of female directors was between 18 and 44 percent, up to conditions. This finding provides an insightful grounds on the effectiveness of the revised Act, regarding appointment of female directors and gives a guideline for policy makers by suggesting optimal level of board gender structure.

Role of Old Boys’ Networks and Regulatory Approaches in Selection Processes for Female Directors

AbstractThis study examines the influence of directors’ and CEOs’ networks in the appointment of female directors. Building on social identity theory and social network theory, we argue that since men and women are members of different networks, recruitment practices based on networks prevent women from accessing board positions. We also examine the role of board gender diversity regulation on the influence of networks, hypothesizing that such regulations help in deinstitutionalizing ‘old boys’ networks’, based on institutional theory. Using a sample of 32,819 new board appointments in the largest listed firms of 17 European countries, the USA and Canada, we determine whether new directors are directly linked through employment, board, charities or club memberships, to the incumbent directors or the CEO. We find that the probability that the new director appointed is a woman decreases by approximately 28% when the new director is associated with one of the incumbent directors. We also find that gender diversity regulation reduces the influence of networks in the appointment of female directors. Our results provide archival evidence that board networks hinder the recruitment of female directors and that gender diversity hard and soft laws deinstitutionalize old boys’ networks.

Does Gender Diversity on Board Promote Corporate Social Responsibility? An Empirical Analysis of Sustainable Development Goals

Recent regulatory changes in India require the firms to improve the appointment of female directors on corporate boards, and it is believed that such a regulation would prove to be a boon in terms of strategic decision making. The Board Capital Theory advocates that the appointment of women directors on board shall enhance various dimensions of the board capital breadth and help in better decision making. With growing consciousness for sustainable practices throughout the globe, it is pertinent to see whether the gender diverse boards can promote corporate social responsibility and create a business case for their upsurge, as it would give room for policy implications. This study investigates the impact of gender diverse boards on promoting corporate social responsibility, using multivariate regression with a sample of NIFTY 50 Index for the period 2014-2019. The study found insignificant positive relation among gender-diverse boards and sustainability. To check for the robustness of the study, we have used two diversity indices, Blau & Shannon index, to supplement our results.

Board feminization and innovation through corporate venture capital investments: The moderating effects of independence and management skills

The purpose of this paper is to investigate the relationship between board feminization and innovation through corporate venture capital (CVC) investments, as well as the moderating effects on this relationship of independence and management skills. This study relies on a set of unique data to measure CVC activity for all French-listed companies that undertook a CVC strategy between 2000 and 2018. We found that the appointment of female independent directors impeded CVC investments, whereas the appointment of female directors with management backgrounds enhanced such investments. Our findings are robust to alternative measures of board feminization. Overall, our results enrich the debate on the usefulness of these innovation vehicles for the French economy.

Cultural environments and the appointment of female directors on boards: An analysis from a global perspective

AbstractHofstede's six cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance, long‐term orientation and indulgence) has received little attention concerning the presence of female directors on boards. Moreover, past research has only focussed on four or five of these six cultural dimensions. Thus, this research aimed to analyse how gender diversity on boards is affected by all of the Hofstede cultural dimensions in a sample of firms operating in different countries. The data for this research were collected from Thomson Reuters database. The article draws on institutional theory, which suggests that firms are influenced by cultural aspects, as they are not separated from their environment but interact with their environment through relationships with stakeholders. The findings show that cultural dimensions, such as power distance, individualism and indulgence, have a positive effect on the proportion of female directors on boards. In contrast, the dimensions of masculinity and long‐term orientation affect the proportion negatively, and uncertainty avoidance does not seem to have an influence.

Does the gender quota law affect bank performances? Evidence from Italy

PurposeThis study aims to examine the impact of an increasing board diversity on the performance of Italian listed banks for the period 2008–2014, taking into account the effects of the implementation of gender quota laws in Italy. The study also investigates the effects of this potential relationship during the crisis that Italy had to cope with since 2011, as well as the potential impact of female directors and their roles on bank boards.Design/methodology/approachTo verify this relationship, the study uses a panel sample of 22 listed banks and applies fixed effects with the Driscoll-Kraay error. Considering the shareholders’ perspective, bank performance (BP) is measured by return on average equity. The robustness of results is verified through return on average assets, Tobin’s Q (a market measure from investors/stakeholders’ perspective) and an alternate estimation model, i.e. GMM.FindingsThe findings highlight a positive relationship between the performance accounting measures and gender diversity, a non-neutral impact of the presence of female directors on boards and a significant and negative effect on market measures.Research limitations/implicationsThe results of the study, as far as accounting measures are concerned, support managerial and legislative efforts toward more gender-balanced boards and the appointment of female directors in executive or independent roles. As per market measures, the results suggest that the presence of women on boards should be considered advantageous in terms of value, so that the market can finally appreciate diverse bank boards.Originality/valueFirst, previous studies did not provide exhaustive results to document the proposed relationship and did not examine this relationship during a financial crisis. Second, the role of female directors on boards is also taken into account. Third, the study highlighted that BP is a multi-dimensional construct, with accounting and market metrics being its distinct dimensions.

Discussion of Do Female Directors on Corporate Boards Make a Difference in Family Owned Businesses?

ABSTRACTMagnanelli, Nasta, and Raoli (2020) examine the relation between female director presence on corporate boards and firm performance in Italy. Using the mandatory gender quota law that was introduced in Italy as an exogenous shock to the appointment of female directors on corporate boards, they find evidence that female directors on the board are associated with better firm performance, especially for family owned firms. However, how this study is positioned within the literature is unclear. My discussion is centered on this ambiguity.JEL Classifications: G3; M1.

Gender-diverse boards get better performance on mergers and acquisitions

In recent years, the composition of boards, particularly the appointment of female directors to the boardroom has attracted significant political and social debate. Despite several studies that have examined links between the representation of women on boards and the corporate performance, research on the board gender diversity in merger contexts is limited. We assess whether the presence of women on corporate boards affects merger and acquisition (M&A) performance. Using acquisition bids by public Canadian companies during 2012-2017, we find that an increasing number of female directors in acquiring companies is associated with an enhanced merger performance and a reduced bid premium. After controlling for gender diversity on executive teams, the value added by having women on boards is particularly noticeable when acquiring firms have few women in the executive teams, and where overconfidence is prevalent. Thus, there is a substitutive relation between gender diversity on the board and gender diversity on the executive team.

General Shareholder Meetings as a Medium for Citizen Activism for Promoting Socially Desirable Outcomes; the case of Gender Diversity in Boards

We empirically examine the effect of citizen activism at the annual general shareholder meetings of listed companies related to gender diversity in corporate boards. Based on a sample of 231 general shareholders meetings that took place over a period of seven years between 2013 to 2019, we find that questions asked by activist shareholders about the board diversity policies led to a significantly higher appointment of female directors compared to the matching sample. We conclude that electronic general assemblies that provide for low cost participation of shareholders, can facilitate socially motivated shareholder interventions that may shape corporate governance choices.

Female Directors, Family Ownership and Firm Performance in Jordan

This study examines the impact of female directors on the financial performance of family and non-family Jordanian firms. A sample of 103 Jordanian public firms listed on Amman Stock Exchange for the time period 2009-2015 was selected. The study had a quantitative approach and used a panel data methodology. The data analysis was conducted using Ordinary Least Square Regression. ROA and Tobin’s Q were deployed as measurement of financial performance. The appointment of female directors does not have any significant impact on the financial performance of family firms. However, with regard to non-family firms, female directors appeared to have a negative impact on the performance of these firms. The impact of female directors on family firm performance merits further research in the context of different countries and cultures. Appointments based on qualifications and expertise is more likely to have a positive impact. Jordan is an under-researched area where the impact of female directors on the firm performance would merit further research. Differentiating between the impact of female directors on family and non-family firms would also merit further research, especially in the context of the conditions under which they are appointed.

Wisdom that Equality Tends to Offer: The Case of Real Earnings Management Practices of Female Directors in IT-friendly Firms of Bangladesh

In this study, we analyze how female directorship and real earnings management of IT-friendly firms are empirically interrelated in context of an emerging economy, viz. Bangladesh. We undertake relevant statistical procedures by utilizing a sample of 1914 firm-year observations as listed on the Dhaka Stock Exchangethroughout the period of 2000-2017.Our results imply that firms with female director(s) are more likely to be involved in real earnings management On the other hand, we also underscore that IT-friendly firms are less likely to be engaged in real earnings management and to provide superiorquality financial reports whereas the significance of this observation becomes more pronounced when conjoined with appointment of female directors in similar firms. We also find that IT-friendly firms with female directors are less probable to be involved in earnings management when compared to both ITfriendly firms with male director(s) and non-IT friendly firms. Based on the evidence, we discern that female directors are included in the board not only for fulfillment of stated quotas, but also for their demonstration of due diligence to restrain management from earnings management practices.

Female directors on the board and cost of debt: evidence from Australia

AbstractWe examine whether the presence of female board members has any impact on the cost of debt among Australian listed companies. We find that female presence on the board is negatively associated with the cost of debt. Most importantly, our findings support the argument of critical mass theory that a certain threshold of gender balance is required for enhancing board effectiveness. Our results are valid irrespective of alternate model specifications and endogeneity issues. Overall, the results provide support to the ASX Corporate Governance Principles and Recommendation for the appointment of female directors on corporate boards.