Boardroom Diversity Research Articles

Corporate Governance in Jordan and Boardroom Diversity: A Critical Review of Literature

This paper focuses on critically analyzing the present literature which discusses the Corporate Governance (CG) concept in Jordan and board diversity, and the potential benefits obtained from adopting this concept in different streams like its impact on the total organizational performance. The paper also aims to present related theories and empirical literature focused on the composition of corporates’ boardroom and the role of its diversity in achieving their objectives such as competitive advantage. It also aims to determine the gaps and guidance for future studies. The review shows examples of basic theories, definition, methodologies, and certain industries deficiencies in previous studies and literature which limits the generalizability of their findings in specific environment, industry, and population. Finally, the study also presents implications on implementation, theory, and the best practice of Corporate Governance.

Value-creating Boards—Diversity and Evolved Processes

This qualitative study is based on 47 interviews with board members of UK-listed companies and reveals that value-creating boards have two main characteristics: a diversity of perspective and evolved board processes. The findings of the study show that the critical attributes of boardroom diversity are members’ culture/nationality, functional background and gender diversity. Value-creating boards also have evolved processes, such as an objective nomination process, periodic evaluations of the board and its members and their ability to work as a team. The article contributes to the Strategic Leadership theory and other role-effectiveness theories. It makes a significant contribution to existing literature on board diversity and value creation by suggesting that board diversity needs a broader definition—more than mere demographic attributes of directors and board processes—to improve boards’ ability to create value for organizations. The article also contributes to praxis by presenting evidence of the impact of board diversity on value creations and suggesting the most critical aspects of value-creating boards. The findings may also guide the formulation of legislation for improving corporate governance by defining diversity more broadly.

BOARDROOM DIVERSITY AND INNOVATION IN THE UAE BANKS

Corporate governance carries strategic importance and should be addressed correctly by decision-makers. Corporate finance literature suggests that diverse boards are a part of good corporate governance practice. However, it is not clear how diverse board characteristics might affect innovation and innovation search strategies. Utilising the data from 25 banks listed in the UAE stock exchanges, this study evaluates the impact of boardroom diversity on firm innovativeness both before and after the drop in the oil prices. The results show that although gender and education do not significantly affect innovativeness of banks, having more experienced and independent board members enhances the innovation. The effect of experienced board members on innovation is more pronounced during the oil price drop period, whereas the effect of independent board members decreases after the drop in the oil prices.

Beyond the Numbers: Substantive Gender Diversity in Boardrooms

The push for gender diversity on public companies' boards has been gaining traction. Advocacy groups, institutional investors, regulators and companies themselves have all recognized the need for more diverse boards. However, gender parity is still absent from most public companies' boards, and a significant number of companies still have no women on their boards. Current public and academic discourse has focused on the number of women serving on the board and their percentage compared to men as the litmus test for gender diversity. However, academic studies and the public push for more diversity have mostly failed to account for another important measure of board gender diversity - the actual role and clout that female directors have within the boardroom. This is what the Article terms as substantive gender diversity. Substantive gender diversity matters. It is at the core of both the social cause and the business case for gender diversity on boards. This Article explores this substantive component of board gender diversity through empirical data relating to the role that men and women play on corporate boards. The Article finds statistically significant differences between the roles of female and male directors. Building on these findings, the Article asserts that regulators, investors and companies must focus not only on increasing the number of women on boards but also on ensuring that female directors enjoy similar parity once elected. The Article then proposes a shift towards a Substantive Gender Diversity Disclosure regime, which would measure and report the substantive aspect of gender diversity in boardrooms.

How do FTSE100 Companies Frame Gender Equality?

This study interrogates the factors motivating corporate engagement with gender equality. When FTSE100 companies discuss boardroom diversity, how are those discussions framed? The findings reveal three dominant framing techniques used: (1) valuing diversity; (2) merit; and (3) nurturing talent. The findings from this study have implications for those seeking to further the debate on boardroom diversity. It demonstrates empirical support for the claim that sincere equality may be eluded or impeded by a myopic corporate focus on the ‘business case’ and treating gender as a further tool for competitive gain. However there are two more positive implications to help set the agenda for further activity in this area. First, this study pinpoints more concretely the reasons why companies value diversity. Reflecting local markets and consumers is a strong motivation. Second and more tentatively, the reported focus on nurturing women through the ‘talent pipeline’, training leaders to be aware of their ‘unconscious biases’, and exploring barriers to progression suggests that workplace structural barriers to equality are being acknowledged.

Presence of Women on Board: Reference to BSE-30 Companies from 2010-2014


 The need for gender diversity in the board rooms is getting accepted at corporate levels both national and international. Any change which is brought about voluntarily is more effective and long lasting. Gender representation on corporate boards of directors refers to the proportion of men and women who occupy board member positions. Studies have shown that even though there is no real dearth of talent pool, India, comparatively, has significantly a very low percentage of women representation on boards. No one doubts the importance of diversity in boardrooms, especially in improving corporate governance. With the changing demographics of the global workforce and the fact that women will control 75% of discretionary spending by 2028, globally companies cannot underestimate the importance of improving the gender balance on their boards. Women are increasingly becoming a major driver of the economy, both as contributors and as customers; it is appropriate that they be a part of the team leading companies. Past researches have shown that boards with more women members act as a motivator to other women employees within the organization. Continuing reliance on existing directors is likely to dilute the quality of board members. Broadening the talent pool by including women directors will help boards get skilled and competent members with a diversity of perspectives and leadership styles who can significantly contribute to board performance. The following study was conducted to assess the presence of women on board in BSE 30 listed companies from 2010 to 2014.

Does Gender Diversity on Boards Reduce Information Asymmetry Problems? Empirical Evidence from the French Market

This study investigates the effect of gender diversity on boards on information asymmetry problems in the French stock market. We use Bid-Ask Spread BASP estimator of Corwin and Schultz (2012) as a proxy for asymmetric information in stock markets. The study shows the following results. First, gender diversity in boardrooms has a negative and significant effect on BASP, only in family-controlled firms. This effect varies according to the position of female directors on the board. In fact, female inside directors have a positive and significant effect on BASP while female independent non-executive directors have a negative and significant effect. This latter effect overbalances female inside directors’ effect. Finally, female attributes such as high educational level, business or corporate law degrees, multiple directorships, more than 55 years old could decrease information asymmetry.

Gender diversity in the Italian boardroom and firm financial performance

PurposeThis study aims to analyse the relationship between board gender diversity and firm financial performance in Italy, where the recently enforced Law 120/2011 prescribes gender quotas for boards of directors.Design/methodology/approachPanel data analysis was used to examine the gender diversity–firm financial performance relationship in an unbalanced panel of 918 Italian listed companies during the years 2011-2014.FindingsGender diversity, as measured by the percentage of women on a board and by the Blau and the Shannon indices, has a positive and significant effect on Tobin’s Q, while the presence of one or more women on the board per se has an insignificant effect on firm financial performance.Practical implicationsThe results suggest that board gender diversity is not a simple “numbers game”, greater gender diversity may generate economic gains, greater gender diversity does not destroy shareholder value, investors do not penalize companies that increase female representation on their boards and Italian companies should focus their efforts on the right mix of men and women rather than on simply the presence of at least one woman on a board of directors.Originality/valueMost articles on this topic use data from countries with a legal system based on common law; this paper analyses Italy, a country with a civil law system. This is almost certainly the first study to examine the effect of board gender diversity on firm financial performance in the Italian market.

Women's Leadership and Corporate Performance

This paper examines the gender diversity in corporate boardrooms in Asia and the Pacific and how the diversity affects corporate performance. We find that boardroom gender diversity is low in Asia with 7.5% female representation on average in 2012, but showing a 1.8% improvement in 2013. The appointment of female directors and a gender-diverse boardroom are on average positively associated with a firm’s subsequent performance, but with large cross-country and cross-measurement differences. Firm performance is the highest when there are two females on the board. Using two-stage analyses, we find that (i) a firm’s past performance does not predict its choice to add female directors; (ii) cross-country differences in female corporate leadership respond to its economic demand and supply as measured by gender equality in college education, labor participation, wages, and infant survival; and (iii) female representation on the board, when determined by these economic factors, is a significant predictor of a firm’s future performance.

Women on Boards in Finance and STEM Industries

We document that women are less represented on corporate boards in Finance and more traditional STEM industry sectors. Even after controlling for differences in firm and country characteristics, average diversity in these sectors is 24% lower than the mean. Our findings suggest that well-documented gender differences in STEM university enrolments and occupations have long-term consequences for female business leadership. The leadership gap in Finance and STEM may be difficult to eliminate using blanket boardroom diversity policies. Diversity policies are also likely to have a different impact on firms in these sectors than in non-STEM sectors.

Boardroom diversity and audit fees: director ethnicity, independence and nationality

This paper investigated the effect of boardroom diversity (herein a composite measure of boardroom ethnic composition, independent and foreign directors) on audit fees in the Nigerian context. A sample of companies listed on the Nigerian stock exchange between 2010 and 2011 was used. The study found that 51% of the sampled companies were ethnically diverse, with about 21% and 49% having foreign directors and independent directors respectively. Further, the results of the panel regression revealed that boardroom diversity had a positive relationship with audit fees. The findings indicate that boardroom diversity enhances board monitoring responsibility and therefore results in an increase in demand for auditors’ effort. The findings of this study have implications for future policy recommendations and formulation because they indicate that boardroom diversity could be a desirable board characteristic that can strengthen the monitoring role of the board.

Boardroom diversity and audit fees: director ethnicity, independence and nationality

Boardroom diversity and audit fees: director ethnicity, independence and nationality

Nomination committee-board gender diversity nexus in Ghana

This study assesses the link between nomination committees' presence and size as well as male directors on nomination committee and gender diversity in Ghanaian boardrooms. We use a dataset of 25 listed and 20 unlisted Ghanaian firms for January 2006 to December 2012; nine years after the Ghana Government endorsed an Affirmative Action Plan to achieve 40% representation of women on all boards by the year 2000. We employ probit and logit regressions to test our hypotheses. Listed firms and financial institutions are more likely to have more gender diverse boards. By contrast, we have no evidence to support the link between board gender diversity and board size, firm age, firm size, firm ownership, board composition and nomination committees' presence and size as well as male directors on nomination committee. Overall, our results raise questions on the appropriateness of the continual use of both the agency and resource dependency theories in explaining board gender diversity in developing economies' perspective. This study is the first of its kind, particularly within developing economies.

Gender diversity of boardrooms and firm financial performance

The impact of boardroom diversity on firm financial performance has attracted growing research interest in recent years. However, due to the lack of readily available datasets for other parts of the world, most of the evidence is based on the US data. The purpose of this study is to examine the relationship between gender diversity in the boardrooms and firm financial performance in a region, where it has never been studied before. Using a sample of 60 firms listed in Abu Dhabi and Dubai Stock Exchanges, first the impact of gender diverse boards on the accounting value of the firms is analyzed. Afterwards, stock price reactions to the announcement of the gender quotas on corporate boards in the UAE are examined. The results do not show a significant impact of female directors on the firm’s both accounting and market value. However, these results should be interpreted carefully since the presence of women in leading positions might affect different aspects of the firm practices.

Women on Boards in Finance and STEM Industries

We document that women are less represented on corporate boards in Finance and more traditional STEM industry sectors. Even after controlling for differences in firm and country characteristics, average diversity in these sectors is 24% lower than the mean. Our findings suggest that well-documented gender differences in STEM university enrolments and occupations have long-term consequences for female business leadership. The leadership gap in Finance and STEM may be difficult to eliminate using blanket boardroom diversity policies. Diversity policies are also likely to have a different impact on firms in these sectors than in non-STEM sectors.

The impact of demographic characteristics of CEOs and directors on audit fees and audit delay

Purpose– The purpose of this study is to examine the impact of gender and ethnicity of CEO and audit committee members (directors) on audit fees and audit delay in the US firms.Design/methodology/approach– Audit-related corporate governance literature has extensively examined the determinants of audit fees and audit delay by focusing on board characteristics, specifically board independence, diligence and expertise. The authors provide empirical evidence that gender and ethnicity diversity in corporate leadership and boardrooms influence a firm’s audit fees and audit delay.Findings– This study finds that firms with female and ethnic minority CEOs pay significantly higher audit fees than those with male Caucasian CEOs. The authors also find that firms with a higher percentage of ethnic minority directors on their audit committee pay significantly higher audit fees. Further, the authors find that firms with female CEOs have shorter audit delay than firms with male CEOs and firms with a higher percentage of female and ethnic minority directors on their audit committee are associated with shorter audit delay. Results indicate that female CEOs and both female and ethnic minority directors are sensitive to the market pressure to avoid audit delay.Research limitations/implications– The results suggest that gender and ethnic diversity could improve audit quality and the firms’ overall financial reporting quality.Practical implications– This study provides insights to regulators and policy-makers interested in increasing diversity within a firm’s board and top executives. Recently, the US Securities and Exchange Commission (SEC) and the European Commission have been pressing publicly traded companies to improve diversity among their directors. This study provides evidence and perspective on how diversity can enhance financial reporting quality measured by audit fees and audit delay.Originality/value– Previous studies have not given much attention on the impact of racial ethnicity in addition to gender characteristics of top executives and audit committee directors on audit fees and audit delay.

Does Board Gender Diversity Influence Financial Performance? Evidence from Spain

In recent years, several countries have enacted guidelines and/or mandatory laws to increase the presence of women on the boards of companies. Through these regulatory interventions, the aim is to eradicate the social and labor grievances that women have traditionally experienced and which has relegated them to smaller-scale jobs. Nevertheless, and despite the advances achieved, the female representation in the boardroom remains far from the desired levels. In this context, it is now necessary to enhance the advantages of board gender diversity from both ethical and economic points of view. This article examines the relation between board gender diversity and economic results in Spain: the second country in the world to legally require gender quotas in boardrooms and historically characterized by a minimal female participation in the workforce. Based on a sample of 125 non-financial firms listed on the Madrid Stock Exchange from 2005 to 2009, our findings show that in the period analyzed the increase of the number of women on boards was over 98 %. This suggests that compulsory legislation offers an efficient framework to execute the recommendation of Spanish codes of good governance by means of the increase in the number of women in the boards of firms. Furthermore, we find that the increase in the number of women on the boards is positively related to higher economic results. Therefore, both results suggest that gender diversity in boardrooms should be incremented, mandatory laws being a key factor to do so.

A women’s boom in the boardroom: effects on performance?

This article analyses whether improving gender diversity in boardrooms improves firms’ economic performance. In the context of French CAC40-listed companies between 2008 and 2012, this research uses instrumental variable panel regressions, including production frontier estimates, to arrive at two key results. First, gender diversity in boards depends on firms’ attributes including their previous gender promotion strategies. Second, promoting women in boardrooms has a significant and positive effect on economic performance while accounting for the endogeneity boards’ gender diversity. Gender diversity even reduces corporate inefficiencies and enables firms to come closer to their optimal performance.

Boardroom diversity and its effect on social performance

In this paper, we are trying to analyse if the boardroom diversity in the Lebanese companies would affect the corporate social performance. In a sample of 41 Lebanese firms, our results showed the effects of the specific variables that formulated the diversity of/in boards. The research question is: was there any significant relationship between each of the following: gender, age, board size, outside directors, serving as board members and the corporate social performance, in the Lebanese organisations. The findings of this research showed that there was no significant relationship between the independent variables; age, gender, outside directors, board size and dependent variable; corporate social performance. Theoretical/academic implication is: the board of directors that unfortunately still were single handedly employed by the owner families, unless it was a worldwide company. The results showed that most Lebanese organisations were family businesses, performing corporate social performance regardless of the board diversity.

Board Diversity: Beginning to Unpeel the Onion

AbstractDespite progress understanding the costs and benefits of diversity in corporate boardrooms we continue to have many unanswered questions. As questions begin to be partially answered, more questions arise. Here I explore those layers of the boardroom diversity onion.