Gender Diversity In Boardroom Research Articles

The Impact of Boardroom Diversity on Company Performance Using Propensity Score-Based Estimators (PSM)

This study investigates the impact of boardroom diversity on firm performance utilizing propensity score- based estimators (PSM). Drawing from a comprehensive literature review, it is established that gender diversity in boardrooms positively influences firm performance, particularly in the financial sector. Using panel data from 503 UK firms over the period of 2015-2017, the analysis focuses on key performance indicators such as market capitalization and leverage. Employing various econometric models, including binary treatment and augmented inverse-probability weighting, the study reveals significant positive effects of female board- room participation on firm performance. Specifically, an increase in female representation is associated with higher market capitalization and an increased leverage ratio, indicating a propensity for riskier investments. Furthermore, the study explores the nuanced effects of different levels of female director representation, highlighting the importance of substantial gender diversity for optimal firm performance. Despite potential limitations such as treatment selection bias and omitted variable bias, the models demonstrate robustness and contribute to the existing literature by providing empirical evidence supporting the positive impact of boardroom diversity on company performance.

A multi‐level model integrating corporate social responsibility and political activity in the European Union: What are the institutional implications for foreign companies?

AbstractMany multinational corporations develop business operations in Europe. The current research attempts to fill the gap on how corporations can increase their political influence in this geography by exploring the joint effect of corporate political activity (CPA) and social responsibility (CSR) on political embeddedness and financial performance. Based on institutional theory and on a sample of autochthonous (European Union [EU]) and allochthonous (non‐EU) firms with declared EU lobbying (from 2008 to 2019) we conducted two studies. Based on a multi‐level model, Study 1 finds strong and robust evidence that boardroom gender diversity and EU lobbyists interactively increase EU political embeddedness. Complementarily, Study 2, which relies on general linear Modeling, suggests that allochthonous corporations are more profitable when they display high‐level political embeddedness and lobbying expenditures, combined with adoption of United Nations (UN) guidelines. Overall, findings show that lobbying in Europe pays off, especially when corporations strive to be aligned with EU ethical values and aspirations. Hiring lobbyists to be based in Brussels and promoting gender equality help establish EU political connections. Subsequently, findings highlight the role that EU political embeddedness, lobbying expenditures, and UN guidelines play in leveraging financial performance, especially across non‐EU corporations. Regarding EU corporations, results show that a firm‐level investment on CPA‐CSR is particularly important. Overall, findings from this research support corporations that are growing businesses in Europe.

Gender diversity in corporate boards of companies listed on the Johannesburg Stock Exchange: a quantile regression approach

Purpose This paper aims to explore the effect of female’s presence in corporate governance structures to reduce agency conflicts, using a quantile regression approach. Design/methodology/approach The research investigates the relationship between company performance and boardroom gender diversity using quantile regression methods. The study uses annual data of 111 companies listed on the Johannesburg Stock Exchange from 2010 to 2020. Findings The study reveals that women on the board impact firm return on assets and enterprise value, varying across performance distribution. This contrasts fixed effect findings but aligns with two-stage least squares. However, quantile regression indicates that female executives and independent non-executive directors have notably negative impacts in high and low-performing companies, highlighting non-uniformity in the board gender diversity effect compared with previous assumptions. Practical implications The empirical findings suggest that companies with no women directors on the board are generally more likely to experience a decrease in performance and enterprise value relative to companies with women directors on the board. As recommended through the King Code of Corporate Governance, it is thus valuable to companies to ensure gender diversity on the board of directors. Originality/value The research confirms through rigorous statistical analyses that corporate governance policies, principles and guidelines should include gender diversity as a requirement for a board of directors.

The effects of boardroom gender diversity on corporate performance: empirical evidence from a sample of European listed companies

The effects of boardroom gender diversity on corporate performance: empirical evidence from a sample of European listed companies

Empowering Women Leadership for Economic Development & Sustainable Growth -The Role of Women Directors

Through their leadership in corporate boardrooms, women directors play a critical role in promoting sustainable growth and driving economic development. This research explores this relationship. With the growing recognition of the value of gender diversity in society, identify and characterize the distinct contributions made by female directors to Corporate Governance, organizational performance, and overall economic growth. It explores the various ways that women directors influence decision-making processes and add to strategic initiatives. The research highlights the importance of varied viewpoints in augmenting inventiveness, efficacy, and durability in establishments. The report also explores the dynamics of empowerment related to women taking on leadership positions on corporate boards. It looks at the obstacles women must overcome to become directors, evaluates the methods used to get beyond those obstacles, and evaluates the empowerment that results for both the person and the larger community. The analysis highlights the influential function of strong female directors as advocates for gender equality and as agents of good change. The study also looks into how initiatives and policies may support gender diversity in boardrooms and offers insights into the organizational and structural aspects that contribute to fostering an inclusive environment that supports women’s leadership through the analysis of effective practices and case studies. This paper attempts to highlight corporate governance changes, leadership development programs, and mentorship programs that help women advancement to positions of directors and key managerial persons in corporate sector.

Board gender reforms and voluntary disclosure: International evidence from management earnings forecasts

AbstractResearch Question/IssueThis study examines the relationship between boardroom gender diversity reforms (BGDRs) and corporate voluntary disclosure in the form of management earnings forecasts (MEFs) in a sample of 43 countries over the period 2000 to 2020.Research Findings/InsightsTaking advantage of the staggered adoption of the gender diversity reforms that aim to improve women's representation on boards, we find that firms exhibit a greater propensity for and frequency of issuing MEFs. These findings hold for both governance‐based and legislation‐based reforms but are stronger for the latter. Furthermore, we find stronger results (a) when female directors possess higher financial expertise and serve on board sub‐committees, (b) when board activity (meetings and attendance) improved following BGDRs, (c) for firms that had all‐male boards before the reforms and where gender diversity increased shortly after the reforms, and (d) for countries with greater legal enforcement and gender equality. Our findings are robust using the stacked difference‐in‐differences approach and alternative samples, models, and fixed effects. In addition, we find that, after the reforms, there is an increase in the forecast horizon, forecast width, bad news disclosure, accuracy, and the number of disaggregated forecast items.Theoretical/Academic ImplicationsOur study provides the first international and comprehensive evidence of the positive role of board gender reforms in the corporate information environment and offers vital policy implications.Practitioner/Policy ImplicationsOur study informs the ongoing debate regarding the effectiveness of and business case for gender diversity reforms. By documenting a causal link between BGDRs and voluntary disclosure, our study provides important implications for policymakers, regulators, investors, and top management teams.

Does a Female Director in the Boardroom Affect Sustainability Reporting in the U.S. Healthcare Industry?

In this in-depth study, we explored the nuanced dynamics of boardroom gender diversity and its consequential impact on sustainability reporting within the U.S. Healthcare sector. Leveraging a comprehensive dataset from Refinitiv Eikon, our analysis spanned a spectrum of 646 observations across 57 healthcare entities listed in the S&P 500, covering the period from 2010 to 2021. Our methodology combined various empirical techniques to dissect correlations, unravel heterogeneity, and account for potentially omitted variables. Central to our findings is the discovery that various metrics of board gender diversity, such as the proportion of female directors and the Blau and Shannon diversity indices, exhibit a robust and positive correlation with the intensity and quality of sustainability reporting. This correlation persists even when controlling for a multitude of factors, including elements of corporate governance (such as board size, independence, and meeting attendance), as well as intrinsic firm characteristics (such as size, profitability, growth potential, and leverage). The presence of female directors appears to not only bolster the breadth and depth of sustainability reporting but also align with a broader perspective that their inclusion in boardrooms significantly influences corporate reporting practices. These insights extend beyond academic discourse by offering tangible and actionable intelligence for policymakers and corporate decision-makers. By elucidating the intrinsic value of gender diversity in governance, our study contributes a compelling argument for bolstering female representation in leadership roles as a catalyst for enhanced corporate responsibility and stakeholder engagement.

Adapting to uncertainty: Gender diversity in boardrooms and its role in enhancing sustainable corporate governance and ESG performance in the era of COVID-19

This research investigates the role of women as a moderator variable in the relationship between governance and environmental, social, and governance (ESG) performance during the COVID-19 crisis. Using the sample of firms from five Association of Southeast Asian Nations (ASEAN) countries, the results show that the presence of women in a board structure has a positive impact on ESG performance during the normal era. However, the woman board members have not proven to strengthen the relationship between governance and ESG performance during the COVID-19 era. This could be caused by the fact that in the COVID-19 era, firms need to concentrate more on short-term profit to survive. However, we believe their presence will improve the company’s reputation and speed up the firm’s recovery during times of crisis.

Board gender diversity and firms' financial resilience during the Covid-19 pandemic

This paper examines the impact of boardroom gender diversity on firms' financial resilience during the COVID-19 pandemic. On the positive side, gender diversity may bring diverse perspectives to the boardroom, but on the negative side, it can also lead to conflicts and slower decision-making in crises. Using survival analysis on a sample of 5,179 global firms, we find that high gender diversity prolongs the recovery time of firms' share prices after the shock, indicating lower resilience. This effect is observed in countries with female directorship quotas, strong governance, and lower GDP per capita.

Boardroom gender diversity and risk-taking in the insurance industry: do organizational form and ownership structure matter?

PurposeThis study aims to investigate the relationship between boardroom gender diversity (BoGD) and risk-taking by property-liability (P-L) stock insurers from an analytical framework that control for organizational form and ownership structure. It relies on the behavioral agency model, the resource dependency theory and the concept of socioemotional wealth (SEW).Design/methodology/approachThis study builds on an unbalanced panel of 2,285 firm-year observations from 232 European and US P-L stock insurers covering the period 2010–2019 and measure risk-taking by using four proxies: total risk (TR), upside risk (UpR), downside risk (DwR) and default risk (DR). Reverse causality and endogeneity concerns are treated by applying different approaches.FindingsFindings suggest that BoGD mitigates the TR, DwR and DR but does not interfere with the UpR, which conceptualizes firm expectations to enhance patrimony and safeguard SEW for heirs, especially in family-owned insurers. The findings hold in various robustness checks including endogeneity and alternative specifications of BoGD and risk-taking.Practical implicationsThis study contributes to practice by contrasting the role of female directors’ bevahior when assuming risk, which seems significantly different depending on the risk-taking specification and the organizational form. The author advises policyholders and policymakers to look at closely on BoGD and ownership structure as they affect insurance company risk-taking.Originality/valueThis study takes a more direct approach to highlight the BoGD’s effect on corporate risk-taking by focusing on the insurance sector which is characterized by risk and uncertainty bearing. To the best of the author’s knowledge, this is the first study to consider the full range of the stock organizational forms and the degree of family control in displaying this effect in both widely traded and closely traded insurers and to assess risk-taking from both market-based and accounting-based aspects.

The effects of boardroom gender diversity and audit quality on financial earnings smoothing in GCC countries: Do government board members moderate the relationship?

This study explores the effects of boardroom gender and audit quality on financial earnings smoothing (FES) in the Gulf Cooperation Council (GCC) countries. Additionally, the moderating effects of government representatives as board members on FES are investigated. The study covers six GCC countries: Saudi Arabia, the UAE, Oman, Bahrain, Kuwait, and Qatar. The sample comprises 188 firms from 2013 to 2019. Multiple regression models are used to evaluate the study’s hypotheses. The findings show that the big international and local firms that have both female and male board members, as well as government representatives, on their boards demonstrate effective governance mechanisms. Although they had a negative impact on higher FES, they had a positive impact on lower FES. As for the moderating role, the findings reveal that the role of government members on the board is complementary to the audit quality, particularly in the big four international and local firms. This research may aid businesses in implementing the best governance practices to avoid FES and improve the quality of accounting data, in line with the objectives of the government. However, good practices in moderating earnings smoothing were mainly seen amongst the males.

Board gender diversity and cost of equity: Evidence from mandatory female board representation

In this paper, we examine whether and how board gender diversity impacts firms’ cost of equity. We predict that firms with greater board gender diversity enjoy a lower cost of equity than firms with less gender diversity due to a larger investor base, less information asymmetry among investors, and more conservative accounting disclosure. We use staggered worldwide boardroom gender diversity reforms as a quasi-natural experiment to conduct a difference-in-differences analysis. Using a large sample of firms from 43 markets, we obtain empirical evidence in line with our prediction. Our results are robust to tests involving alternative samples, specifications, and explanations. Cross-sectional analyses show that the effect of board gender diversity on the cost of equity is less (more) pronounced when firms are more (less) gender-equal, transparent, and conservative in accounting.

The impact of board gender diversity on financial performance of listed firms in Tanzania: A panel analysis

This study seeks to determine whether gender diversity in the boardroom improves the financial performance of listed firms in Tanzania by examining theoretical and empirical findings and using 90 firm-year observations of 15 listed firms over six years from 2016–2021 from firms listed at the Dar es Salaam Stock Exchange (DSE). Return on equity (ROE) and Return on asset (ROA) were used as financial performance metrics. This study uses a balanced panel data analysis. The results showed that there was no statistically significant relationship between the percentages of women directors on boards or in executive roles and the financial performance of listed firms in Tanzania as measured by ROA and ROE. The results are inconsistent with theories of agency and resource dependence. The study is restricted to a sample of listed firms from DSE in Tanzania. The scope of future studies should be expanded to include listed firms across the East African region and more explanatory variables such as the Blau index in measuring boardroom gender diversity.

Does overconfidence blur out the investment efficiency? The managerial overconfidence and internal financing effect on investment efficiency: evidence from MENA region

PurposeThis paper aims to investigate whether managerial overconfidence has an impact on investment inefficiency beyond its influence on the use of internal financing or whether internal financing behaves as a full intermediary.Design/methodology/approachThe study employed three dependent variables, namely business investment scale, overinvestment and underinvestment, and analyzed data from 282 firms across five different industries listed in 11 Middle East/North Africa (MENA) countries between 2013 and 2019 using regression analysis via least square dummy variable (LSDV).FindingsThe findings indicate that while internal financing can provide funding for investment opportunities and address capital shortages, it may also result in overinvestment, particularly in companies led by overconfident managers.Practical implicationsStakeholders, including shareholders and board of directors, should pay attention to the chief executive officer (CEO)'s behavioral aspects such as overconfidence in decision-making while undertaking new investment projects. Additionally, regulators and policymakers in emerging markets like MENA should re-evaluate the corporate governance framework, devise a corporate governance index and promote boardroom gender diversity as it can significantly reduce risk.Originality/valueThis study adds to the limited research on the impact of managerial overconfidence on investment efficiency in the MENA region. By focusing on this region, which has unique economic, political and social characteristics, the study provides new insights into the role of behavioral biases in investment decision-making in emerging markets.

Women's movements and female board representation

AbstractScholars know relatively little about the potential impact of women's movements on gender diversity in the corporate world. We aim to fill this gap in the literature by providing the first empirical analysis of the relationship between women's movements and female representation on boards of directors. Drawing on political process theory, we argue that the strength of a women's movement is positively associated with its ability to increase the number of women on corporate boards. Moreover, we posit that the effect of women's movements on female board representation is moderated by corporate opportunity structures, that is, attributes of firms that make them more or less receptive to social movement activities. Three firm characteristics are particularly relevant in the context of boardroom gender diversity: reputation‐seeking behavior, commitment to corporate social responsibility, and political orientation. Using firm‐fixed effects models to analyze data on more than 2000 companies from 10 countries over a period of 10 years, we find support for three of our four hypotheses. Theoretical and practical implications are discussed.

Female directors and working capital management: aggressive vs. conservative strategy

PurposeThe purpose of this study is to analyze the impact of board gender diversity (BGD) on working capital management (WCM) decision by scrutinizing different positions covered by female board directors.Design/methodology/approachThis study uses a panel data regression model with fixed effect estimations and the generalized method of moments (GMM) to determine the impact of BGD on WCM strategy. This study uses a panel data analysis for 277 non-financial firms listed on Bursa Malaysia over the period from 2011 to 2019.FindingsThe results of this study show that female directors fulfilling either monitoring or executive positions increase the investment in working capital (WC), suggesting a conservative WCM. Precisely, results from this study are consistent with the embedded risk aversion traits of female executives and, hence, preserve high level of investment in WC, which allows superior levels of liquidity to meet firms’ financial commitments. The results also show that Malaysia commitment to gender equality is a key moderator in the female directors – firm WCM relation. The authors find that when the level of gender equality is greater, female directors support firms in adopting aggressive WCM strategies.Practical implicationsThis study’s findings provide insights for corporate decision-makers in helping them to determine the board’s design in term of roles and composition that enhances the efficiency of WC. The results also provide guidelines for policymakers and regulators to formulate strategies that support more female board representation. In this way, firms should appoint more female directors on their boards to ensure prudent WC decisions. Moreover, given that female directors are an important determinant of a firm’s WC policy, investors and various internal or external monitoring groups need to factor boardroom gender diversity into their investing, hiring and monitoring mechanisms.Originality/valueWhile prior research has examined the effect of BGD on firm performance, to the best of the authors’ knowledge, this study is the first to investigate the effect of BGD on the WCM decision.

How Much Does the Board Composition Matter? The Impact of Board Gender Diversity on CEO Compensation

The notion that female directors are better disposed to protect shareholders’ interests has brought boardroom gender diversity into the limelight. Echoing these emerging trends, this paper analyzes the relationship between board gender diversity, i.e., proportion of female directors on the corporate board, and Chief Executive Officer’s (CEO) compensation. Consistent with conjecture, the analysis suggests that large and diversified corporate boards are the main determinants of CEO compensation. Furthermore, longer-tenured CEOs who also serve as board chairperson receive higher total compensation and bonuses than their counterparts do. Into the bargain are corporate performance proxied by return of assets (ROA) and firm attributes, i.e., firm size and institutional ownership, which have divergent but direct implications for CEO compensation.

Boardroom gender diversity reforms and institutional monitoring: global evidence

Boardroom gender diversity reforms and institutional monitoring: global evidence

The missing theory for regulation and law-making: women in corporate leadership

ABSTRACT While enough ink has been spilled debating boardroom gender diversity, there is little analysis from a regulatory standpoint in relation to the divergence found in legal strategies across countries. It is this gap which this article seeks to address. In doing so, the article explores the nexus between the rationales and the policy approaches/legal strategies adopted by countries, through the specific comparative examples of Norway and the United Kingdom. This methodology, akin to reverse engineering, helps to explain what determines a country's choice for a mandatory quota or discretionary targets. While offering this explanation, the nuances of hard law versus soft law as policy approaches are examined, specifically within the realm of corporate governance. Next, based on the connections so deduced, an attempt is made to theorise how a legal strategy is derived, and, furthermore, how an optimum strategy can be formulated, although subject to national context.

Narrative forward-looking information disclosure, do ownership concentration, boardroom gender diversity and cultural values matter? A cross country study

PurposeThis study aims to identify the main factors that drive the differences in the levels of forward-looking information disclosure (FLID) across four countries. This study goes beyond the firm-specific characteristics to the countries-specific factors to explain the observable differences in the level of FLID among the UK, Italian, Hong Kong and Chinese American Depositary Receipts (ADRs) firms trading in US Exchanges.Design/methodology/approachTo validate the levels of FLID, corporate financial information environment (CFIE)-final reports structure extractor (FRSE) was conducted on the annual reports of a sample of 353 listed firm observations in 2020 across four different countries. Also, the ordinary least square regression model was used to examine the proposed relationships.FindingsThe empirical results indicate that the level of FLID is highest among the Chinese ADRs firms trading in US Exchanges and UK listed firms. Also, ownership concentration and gender diversity have a positive correlation with the level of FLID. Additionally, long-term orientation positively influences the level of FLID. Considering the moderation effect of power distance and masculinity dimensions, countries with larger power distance tend to have a lower impact of ownership concentration on the level of FLID, whereas countries with higher masculinity tend to have a lesser positive relationship between gender diversity and the level of FLID.Originality/valueNotwithstanding, this study provides novel and persuasive evidence regarding the effects of firm- and country-specific characteristics as possible determinants of forward-looking disclosures, drawing on evidence from international companies with free floats, boards with female quotas and cultural values including masculinity and long-term orientation. This work offers unique insights from the upper echelons lens, which implies that firms need to obtain a critical mass of gender diversity to achieve a more balanced forward-looking perspective on their annual reports.