The impact of board-level female directors on firm performance: evidence from India
Equality, Diversity and Inclusion
ISSN: 2040-7149
Article publication date: 22 March 2023
Issue publication date: 25 October 2023
Abstract
Purpose
This study investigates the impact of female directors on firms' financial performance by scrutinizing the different roles they are empowered to fulfill.
Design/methodology/approach
This study examines the impact of the roles performed by female directors on firms' financial performance using a panel dataset of the top 100 listed Indian firms over a period of 5 years. The study uses an appropriate panel data model for empirical analysis. For the robustness evaluation, a two-stage least square (2SLS) with the instrumental variable model were used.
Findings
The findings reveal a significantly positive impact of the total percentage of female directors on firms' financial performance. Further, by disentangling the impact of the total percentage of female directors between independent directors and executive directors, the study shows that independent female directors make a significant positive contribution to their firms' financial performance. By contrast, the performance impact of female executive directors was insignificant. In addition, the findings reveal that firms with a higher proportion of independent female directors outperform firms with a higher percentage of female executive directors.
Originality/value
This study is the first of its kind to unravel the performance impact of female directors and distinguish between the roles of independent directors and executive directors in the context of the emerging market of India, after the imposition of a gender quota for corporate boards.
Keywords
Citation
Saha, R. (2023), "The impact of board-level female directors on firm performance: evidence from India", Equality, Diversity and Inclusion, Vol. 42 No. 8, pp. 945-967. https://doi.org/10.1108/EDI-07-2022-0172
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited