Board gender diversity and firm risk: international evidence
ISSN: 0268-6902
Article publication date: 2 March 2022
Issue publication date: 30 March 2022
Abstract
Purpose
This paper aims to uncover the global trend on the relationship between board gender diversity and firm risk. In addition, this paper investigates how country characteristics affect the relationship between board gender diversity and firm risk.
Design/methodology/approach
This study uses a large sample of firms in 45 countries for the period from 2002 to 2018. Ordinary least square regression is used as a baseline methodology, along with firm fixed effects. Difference-in-differences regression, two-stage least squares regression (instrumental variables approach) and change-on-change regression are adopted to better mitigate endogeneity.
Findings
This study finds that board gender diversity is associated with lower firm risk worldwide. In addition, the negative effect of board gender diversity on firm risk is more pronounced for firms that can more easily attract female directors, and for countries with lower power distance and greater preference for individualism.
Practical implications
The findings offer insights into the intense debate in recent years among academics and practitioners on the effect of board gender diversity on firm outcomes. Shareholders and directors may take the findings into account when they consider appointing female directors. The findings should be of interest to policymakers in countries that have not yet promoted board gender diversity.
Originality/value
By using an international sample with board gender quotas in different countries, this paper provides novel and persuasive evidence regarding the impact of board gender diversity on firm risk. This paper also adds to the literature by showing that the relationship between board gender diversity on firm risk is influenced by country characteristics.
Keywords
Citation
Li, Z., Jia, J. and Chapple, L. (2022), "Board gender diversity and firm risk: international evidence", Managerial Auditing Journal, Vol. 37 No. 4, pp. 438-463. https://doi.org/10.1108/MAJ-05-2021-3157
Publisher
:Emerald Publishing Limited
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