Board Gender Diversity Research Articles

Female directors and firms’ financial performance: an empirical application of Kanter’s theory in the Indian context

Purpose Given the relevance of female directors in the governance of any firm, this paper aims to examine their effect on firms’ financial performance by investigating their general impact and segregating the same into different subgroups based on Kanter’s theory. Design/methodology/approach To achieve the purpose, this study selects a sample of the top 100 listed Indian firms for the period of 2014–2018 and gathers the data pertaining to the variables under consideration from the respective firms’ annual report and corporate database Capitaline Plus. For undertaking the investigation, the authors have segregated the sample into three groups, i.e. firms with boards having less than 10% of female directors are called skewed boards; firms with boards having female directors that range from 10% to 20% are called as tilted board; and firms with boards having sizable representation of female directors of above 20%. To examine the performance impact of overall female directors and their different subgroups, the authors have used a generalized estimating equation model. For the robustness test, the authors have used the fixed-effect model. Findings The authors find a significant positive impact of the overall percentage of female directors on the financial performance of firms. Additionally, the results indicate that boards with a titled group of female directors and boards with a sizable representation of female directors significantly positively impact firms’ performance. However, the authors fail to extricate any significant performance impact of boards with a skewed group of female directors. Practical implications First, the study reveals that despite prevailing nepotism in India, female directors, owing to their core characteristics, can create a favorable perception of firms in the market. Second, it also works as an eye-opener for regulators by revealing the minimum threshold for female directors that a board should have to exploit the benefits of a gender quota rather than mere compliance with the requirements of the Companies Act, 2013. Third, it implies that more gender-diverse boards can improve a firm’s financial performance only if female directors range between the thresholds of 10% to 20%. Finally, the finding is significant for changing the business culture in India, where institutions are traditionally less supportive of women than in other emerging countries. Originality/value Departing from existing studies, which provide evidence on the performance impact of the overall percentage of female directors, the study unveils the differential impact of female directors on firms’ financial performance depending on their level of representation on the board. To the best of the authors’ knowledge, this is the first study in the context of an emerging market to test Kanter’s theory.

From zero to Hero: effect of gender diversity on corporate social performance in Brazil

PurposeThe purpose of this study is to examine the effect of board gender diversity on corporate social performance (CSP) in Brazilian companies.Design/methodology/approachThis research collected available information on the CSP, financial performance and governance of Brazilian companies for five years (2016–2020). The dependent variable of this study is CSP (workforce, human rights, community and respect for the product). The independent variable is gender diversity. The authors control financial performance, the presence of a social responsibility committee and the industry sector. The data were analyzed using the dynamic panel data system, which is the generalized method of moments (GMM) estimator.FindingsThis empirical investigation confirmed the hypothesis that the female presence on boards has a positive effect on the CSP of Brazilian companies. The findings of this study are consistent with previous studies. The authors' results suggest that women are more socially aware and exhibit more social corporate behavior.Practical implicationsSupplementing financial reports with nonfinancial information draws the attention of regulators and shareholders. Companies can also create human resources policies for appointing women to senior management positions and a succession plan that values the talent that women bring to companies.Originality/valueA critical mass of women on the board can provide an effective balance, considering the diversity of backgrounds and experiences between men and women. Just one woman on the board can mean representation and resistance, but with a critical amount, female directors can have a voice and help formulate strategies aimed at CSP.

Firm Attribute and Performance of Listed Deposit Money Banks in Nigeria

This study investigated the impact of firm attribute on performance of listed Deposit money banks in Nigeria from (2011-2020). Two research questions and corresponding two hypotheses were formulated for the study. Ex-post facto research design was employed in the study. The population of the study included all Deposit money banks quoted on the Nigerian Exchange Group (NXG) (NSE) as at 31st December 2020 with a sample size of Twelve (12) Deposit money banks selected from the population. The study relied on secondary sources of data which was obtained from Annual reports of sampled companies as provided by individual companies, Nigerian Exchange Group (NXG) website and Machame Database (www.machameratios.company.site). Amongst other preliminary analysis and tests, the panel least square regression analysis was done in validating the hypotheses. The study found that firm size and board gender diversity has a statistically significant impact on performance. Consequent on the findings emanating from the study, the study recommended amongst others that there should be a reasonable mix of the board of directors and risk committee to recognize female directors as this will have direct impact on the firms’ image and goodwill. Also, the study recommends that, the managements of banks should find ways to improve and acquire the optimal utilization of their assets, while making maximum use of their resources during the operation processes as this would help them in improving their earnings.

Does the Relationship between Board Gender Diversity, other Effective Board Characteristics, and Audit Quality Traits affect the 2Fs: Financial Performance and Financial Structure? “Evidence from Egypt”

Does the Relationship between Board Gender Diversity, other Effective Board Characteristics, and Audit Quality Traits affect the 2Fs: Financial Performance and Financial Structure? “Evidence from Egypt”

Pengaruh Diversitas Gender Dewan terhadap Kinerja Perusahaan (Studi Global pada berbagai Negara di Dunia)

In this literature, the author reviews board gender diversity in areas related to corporate governance and corporate finance, namely Company Performance globally in various countries in the world. The research method in this article uses a qualitative research approach with the type of research, namely Systematic Literature Review (SLR), where researchers identify and summarise topics related to the main topic, then 24 research articles are selected that are most suitable and used as research samples, as for the subject of the topic mapped in this literature, namely 12 countries in the world. After analysis, the majority of countries in the world, namely Turkey, Ghana, United Kingdom, Greece, Pakistan, Russia, Brazil, India, Indonesia, and Pakistan, state that Board Gender Diversity (BGD) can improve company performance. While in several other countries such as Malaysia, Nigeria, and Latin America, the existence of BGD can reduce company performance.

The effect of corporate governance on firm performance: perspectives from an emerging market

The aim of this research is to inspect whether Corporate Governance (CG) attributes such as Audit Meeting Frequency, Ownership Concentration, Board Meeting Frequency, Foreign Ownership, Institutional Ownership, Board Gender Diversity, Audit Committee Size, Board Size, Audit Reputation and CEO Compensation affect firms’ performance in Pakistan. This research employed the pooled least square method to estimate the association among attributed of CG and firm performance measures (Return on Asset and Tobin’s Q) by selecting the Cement Sector and Energy sector companies listed in Pakistan Stock Exchange (PSX) during 2009–2022. A substantial result is that the energy sector’s CG system does not differ from the cement sector. Tobin’s Q is lesser than ROA, suggesting the same condition as companies in the cement sector. On average, firms in the energy sector are older than the firms in the cement sector. It contradicts the result of profitability proxies of the energy sector. Being older firms, the profitability proxies show lower returns as compared to cement sector firms. Pakistan needs a uniform CG code and the need for good CG practices for specific approaches of firms. This study enhances the literature in CG domain by investigating the impact of CG processes in Pakistani firm’s performance. In Pakistan, there are studies available on the topic but the comparison between the selected two industries with such a large data set are the unique elements of the current research. In prior studies, the time interval was also short, only five years. Further, the firm performance was measured by an accounting-based tool and did not include a market-based tool for performance, as well as variables for CG were also limited.

Board gender diversity and cost of debt financing: Evidence from Latin American and the Caribbean firms

AbstractThis research examines the relationship between board gender diversity and the cost of debt financing in Latin American and Caribbean firms. We implement the Fuzzy Logistic Autoencoder model, using data for 470 firms spanning 2016–2021 from the Eikon Refinitiv Thomson Reuters database. Our findings suggest that the variables independent board, policy board diversity, sustainable development goal 5, executive gender diversity, and governance consistently demonstrated effects on reducing the short‐term and long‐term debt cost over the period analyzed. Consequently, the potential benefits of including women on the board of directors are conducive to improving the firm's reputation, which materializes in reducing the cost of debt. The results offer valuable insights to researchers and investors seeking to understand the role of BGD composition within firms and its financial impact.

Kinerja ESG: Kontribusi Board Gender Diversity Dan Network

Environmental, social and governance (ESG) performance has been a hot topic among investors, decision-makers and academics. Factor affecting ESG performance has been largely done but failed to pay attention to the different board governance systems, such as Indonesia’s board governance system. This paper investigates the contribution of the board gender diversity and board network as well as foreign ownership on ESG performance using blue chip stock (LQ-45) listed in the Indonesia Stock exchange. Seventeen companies with five years of data (2013-2017) participated in this study. Multiple regression analysis is employed, and the result shows that gender diversity on the supervisory board negatively impacts environmental and social performance. Second, the board network on the supervisory board has a positive impact on environmental and social performance, and the board network on the management board has a positive impact on social performance. Third, foreign ownership has a positive effect on governance performance. This research has practical implications where if a company plans to improve ESG performance, it must more effectively select a female supervisory board so that its existence positively impacts ESG performance. In addition, ESG performance can also be increased by appointing a supervisory board who have a high social and professional network so that it can have an impact on ESG performance. Finally, ESG performance can also be improved by increasing foreign ownership. This research contributes to social capital, stakeholder, agency, and resources-dependent theory.

The Effect of Board Gender Diversity on Corporate Sustainability Performance with Enterprise Risk Management as a Moderating Variable

Corporate Sustainability Performance is an approach taken by companies to create long-term profits by developing business strategies that prioritize profits and pay attention to social, cultural, economic, and environmental factors. Gender diversity plays an important role in achieving sustainable performance because the gender diversity of board members can improve company performance. This study aims to examine the effect of board gender diversity on corporate sustainability performance by using ERM as a moderation variable. The study in this study took samples of energy and mining companies on the IDX. This includes mining companies that have published integrated reports (IRs). The type of data used is secondary data using random sampling to determine the number of sampling trials. This study used qualitative descriptive approach and causality method. Data analysis in this study used SPSS to examine the effect of the independent variable on the dependent variable. The results of this study provide an in-depth understanding of the relationship between independent and dependent variables, with implications that can increase awareness of the importance of gender diversity in the context of sustainable company performance.

Corporate governance mechanisms and renewable energy transition

PurposeThe intensity of carbon emissions has led to the serious problem of global warming, and the consequences in terms of climatic disasters are gaining increasing attention worldwide. As the energy sector is responsible for most global emissions, developing clean energy is crucial to combat climate change. This study aims to examine the relationship between corporate governance and renewable energy (RE) consumption and explore the interaction between RE production and RE use.Design/methodology/approachThe study adopts an econometric framework of a panel model, followed by the robustness check using alternative methods, including logit regressions. The bivariate probit model is used to analyze the interaction between the decision to use and the decision to produce RE. The analysis is based on a sample of 3,896 firms covering 45 countries worldwide.FindingsThe results reveal that appropriate governance mechanisms positively impact RE consumption. These include the existence of a sustainability committee; environmental, social and governance-based compensation policy; financial performance-based compensation; sustainability external audit; transparency; board gender diversity; and board independence. Firms with appropriate governance mechanisms are more likely to produce and use RE than others. Finally, while RE use positively impacts firm value and environmental performance, the authors find no significant effect on current profitability.Originality/valueThis study goes beyond previous research by exploring the impact of multiple governance mechanisms. To the best of the authors’ knowledge, this is also the first study examining the relationship between RE use and firm value. Overall, the findings suggest that RE transition requires, first of all, establishing appropriate governance mechanisms within companies.

Board Profile and Pandemic Covid-19 Effect on Improving Level of Environmental, Social, And Governance (ESG) Disclosures: (Evidence from Energy Companies listed on the Indonesia Stock Exchange in 2018-2020)

Environmental and social issues brought new emerging issues in running the business; profit was no longer the ultimate goal for sustainability, but concern to improving environmental, social, and governance quality is the one way to achieve sustainability. This study examines the effect of the BOD profile on the level of Environmental, Social, and Governance (ESG) disclosure. The CEO’s educational background measured proxies of BOD profiles, the proportion of gender diversity in the Board of Directors, and the CEO’s age. This study uses quantitative methods and multiple regression analysis to test the hypothesis. The sample in this study are companies listed on the Indonesia Stock Exchange in the energy sector, with a total sample of 62 firms years. The results showed that the CEO’s educational background and CEO Age positively affect the level of ESG disclosure. Board gender diversity and the COVID-19 pandemic did not affect the level of ESG disclosure.

Board Diversity and Corporate Sustainability Performance: Do CEO Power and Firm Environmental Sensitivity Matter?

The study assesses whether CEO power and firm environmental sensitivity matter to board diversity (i.e., board cultural (BCD) and board gender (BGD) diversity) and corporate sustainability performance nexus. Australian S&P/ASX300′s firm data for a period of ten years (2011–2020) were used in the study’s analysis. Although board diversity positively influences ESG performance, the presence of powerful CEOs and when firms operate in environmentally sensitive industries weaken the board diversity and sustainability performance nexus. Additionally, the study found that although board diversity is essential, the effect of BGD has a greater statistical power on sustainability than BCD, affirming the present focus on BGD.

Environmental innovation in healthcare industry: The moderating role of women on board in cost of debt

AbstractOver recent years, a growing body of empirical evidence highlights a positive correlation between ecological innovation and firm value creation. Building on natural resource‐based view and upper echelons theory, this study examines the relationship between environmental innovation and the cost of debt, by verifying whether and to what extent there is a moderation effect due to the board gender diversity. Using a sample of 458 European firms belonging to the healthcare industry, we carried out a cross‐sectional analysis, given that the sample is based on just the fiscal year 2020. The empirical evidence shows that environmental innovation decreases the cost of debt, by reducing company's perceived risk. In addition, board gender diversity negatively moderates the foregoing relationship. Therefore, our study suggests that public policy makers might underpin environmental innovation policies and specific features on board of directors, since they exert relevant implications on firm's value creation and investors' decisions.

The role of endogeneity in the relationship between board gender diversity and corporate social performance: evidence from a control function method

The role of endogeneity in the relationship between board gender diversity and corporate social performance: evidence from a control function method

Microplastics in aquatic bodies: Assessing the role of governance mechanisms in industrial wastewater management

The purpose of this research is to examine the association between corporate governance mechanisms (board independence, board gender diversity, Chief Executive Officer (CEO) duality, and environmental, social and governance (ESG) linked compensation) and wastewater recycling as a strategy for managing the flow of microplastics into the aquatic environment. The study analysed an international sample of top companies on the Forbes 500 list over a 15-year period during the millennium development goals (MDGs) and sustainable development goals (SDGs) eras. Multiple regression analysis with fixed effect OLS, two-stage least squares regression, propensity score matching, and logistic regression were applied in the data analysis. The results show that, at the aggregate level, board gender diversity is positively associated with wastewater recycling, whilst CEO duality has a significant negative impact. When disaggregated into industries, board gender diversity is positively associated with wastewater recycling in high-polluting and low-polluting industries. In relation to the MDGs/SDGs eras, the impact of board gender diversity is more significant in the MDGs era than in the SDGs era. At the geographical region level, CEO duality has a significant negative impact on wastewater management in the America and Asia Pacific regions, whilst the effect of CEO duality is significantly positive in the Western Europe region. We also find that a minimum of two female directors is required to improve wastewater management practice. The study concludes that whilst board gender diversity is a notable driver of wastewater management, CEO duality diminishes the commitment of multinational entities (MNEs) to addressing wastewater management issues. Our result is robust to (i) alternative measures of wastewater management, (ii) alternate sample composition, (iii) alternate method of data analysis, and (iv) endogeneity checks. The study contributes to the limited literature on waste management and the circular economy, particularly governance mechanisms’ role in wastewater management in an international context.

Does effective corporate governance mitigate the negative effect of ESG controversies on firm value?

This study examines the effect of corporate governance on the relationship between ESG controversies and firm value. Panel data consisting of 883 non-financial Chinese listed firms from 2018 to 2022 are analyzed. We find a significant and negative impact of ESG controversies on firm value. The presence of effective corporate governance is found to mitigate the negative impact of ESG controversies on firm value. The findings are robust to the two step GMM, 2SLS method and heteroskedasticity test. Then we explore the influence of internal governance factors and external corporate governance factors respectively. Among the internal factors, we find that board gender diversity, board independence, equity incentive, and high reputation VC/PE shareholdings all have a significant and positive impact, while board size and sustainability committees have no significant impact. In terms of external governance factors, ESG controversies in regions with fierce market competition have a relatively small impact on firm value, while those in regions with perfect legal environment have a more severe impact on firm value. Further analysis shows that environmental, social and governance controversies urge enterprises to improve their environmental and social performance and reduce inefficient investment respectively, and these effects are more pronounced in the corporate governance group with high level. However, governance controversies have no impact on accounting information quality. These findings have important policy implications for managers and practitioners by supporting the idea of companies adopting appropriate corporate governance practices that can effectively mitigate the negative effects of corporate controversies.

Corporate board, audit committee and earnings manipulation: does the corporate regulation matter? An emerging economy perspective

Purpose This paper aims to investigate the impact of the revised Code of Corporate Governance 2017 (CCG-2017) clauses pertaining to board independence, mandatory inclusion of female directors, audit committee (AC) chair independence and directors’ expertise on earnings manipulation. Design/methodology/approach Using an unbalanced panel of 323 listed companies from 2015 to 2019, this study uses panel data regression models with a robust methodology called difference-in-differences to tackle the potential endogeneity. Findings This study’s findings show that, as compared to the pre-CCG-2017 period, board- and AC-related variables increased significantly in the post-CCG-2017 period. Furthermore, financial experts on the board and board independence have a negative effect on discretionary accruals (DAs), whereas female directors and DAs are positively related, as is real activity manipulation. The AC-related variables, such as AC independence, expertise in AC, and AC chair independence, are significantly different from the preperiod to the postperiod, whereas their relationship is not according to the hypotheses of the study. Moreover, these results are robust to additional analysis of the alternative proxies for female directorship and the endogeneity problem. Practical implications The findings of this study have implications for regulators and practitioners who are concerned with the functions of the board of directors (BOD). The findings of this research study show that earnings management (EM) may be reduced by independent and expert directors. However, board gender diversity is not reducing the EM. Therefore, the decision to appoint female directors to the board should be based on their business and professional attributes rather than simply filling quotas or blindly adhering to regulations. Moreover, the findings of this research may assist the regulator in encouraging listed firms to enhance board governance via independence, diversity and competency, which are useful for effective monitoring. Originality/value This study fills a gap in the literature by providing the first evidence of country-specific regulation (CCG-2017), concerning the BOD and AC-related clauses on EM in Pakistan, which is missing in the relevant literature general and in Pakistan in particular.

CEO-director ties and board gender diversity: US evidence

The gender legislation enacted around the world has put enormous pressure on companies to increase the number of women on their boards. Employing US firm-specific data, we document a significant negative relationship between CEO-director ties and female representation on the board, suggesting that socially connected directors are detrimental to gender parity in senior management. We find that the situation improves in firms with female directors with valuable attributes while being moderated by CEO characteristics. Cross-sectional analyses reveal that the association is more pronounced during the low board gender diversity periods and for firms that are led by male CEOs or have weak monitoring mechanism. We rule out endogeneity concerns by performing a battery of analyses. The findings remain robust in a range of sensitivity tests. Our study offers practical implications for regulators and top management teams to improve board effectiveness, thus engendering lasting transformational change in the boardroom.

Does Board Gender Diversity Affect Financial Distress

Females were regarded as incompetent as a leader before the current modern era. But, female in managerial positions has been increasing since 2015. As part of corporate governance, there is only a few research regarding gender diversity’s relationship with financial distress with different results on different context. This research investigates the role of board gender diversity on firms’ financial distress. Multiple linear regression is used as the method of study. In general, board gender diversity does not have any relationship with financial distress in the infrastructure firms. When dissected into 4 sub-sectors, 1 out of 3 sub-sectors with 1 other sub-sector excluded, shown a negative relationship between board gender diversity and financial distress while the other 3 sub-sectors do not show any significant relationship.
 Keywords: Corporate Governance; Financial Distress; Gender Diversity.

Shhh… Do Gender-Diverse Boards Prioritize Product Market Concerns Over Capital Market Incentives?

We examine whether gender-diverse boards prioritize product market concerns over capital market incentives when proprietary costs are high. We argue that gender-diverse boards protect their firm’s competitive edge and maximize long-term shareholder wealth by ethically and carefully maintaining the confidentiality of proprietary information. Due to the reduced disclosure of proprietary information, firms with gender-diverse boards are likely to face more adverse selection when proprietary costs are high. However, the reduced disclosure of proprietary information enables firms with gender-diverse boards to enhance and maintain their competitive edge and gain higher long-term returns. Using a matched sample of the United States-listed companies, we find that firms with gender-diverse boards, relative to similar firms with all-male boards, (1) are associated with higher adverse selection costs and (2) higher long-run stock returns when the firm faces high product market competition. Collectively, our results suggest that firms with gender-diverse boards, which initially experience higher adverse selection in a competitive environment, are rewarded with a net gain of about 10 percent of their stock price in three years. Our research contributes to the literature by highlighting the importance of board gender diversity in fostering the ethical redaction of proprietary information for proprietary cost-based motives as opposed to agency cost-based motives. Our findings have important implications for regulators, firms, and shareholders by identifying gender-diverse boards as an antecedent for the ethical redaction of proprietary information.