Women on boards in India: a need or tokenism?

Varnita Srivastava (Department of Management Studies, Indian Institute of Technology (Indian School of Mines), Dhanbad, India)
Niladri Das (Department of Management Studies, Indian Institute of Technology (Indian School of Mines), Dhanbad, India)
Jamini Kanta Pattanayak (Department of Management Studies, Indian Institute of Technology (Indian School of Mines), Dhanbad, India)

Management Decision

ISSN: 0025-1747

Publication date: 13 August 2018

Abstract

Purpose

The purpose of this paper is to examine the significance of gender diversity on corporate boards in India in the light of recent regulatory reform introduced in the Companies’ Act, 2013 which mandated the presence of at least one woman on the corporate boards of all the listed firms.

Design/methodology/approach

Based on a panel of 300 firm-year observations for 15 years from 2001 to 2015, regression analysis has been conducted to analyze the relation between gender-related variables of corporate boards with firm-specific financial characteristic, cost of equity (COE) and return on assets (ROA) of firms listed in CNX Nifty, a major financial market index of India.

Findings

The analysis indicates that boards with gender diversity explain a slightly more than 5.5 percent change in a firm’s COE and have a much higher impact of 45 percent on a firm’s ROA. The presence of female directors on the boards and their independence have a negative association with the COE, whereas the level of involvement of female directors on different committees has a positive association with the ROA.

Practical implications

The findings may help theorists in defining the right mix of female on the corporate boards in an emerging economy. Also, by taking input from the findings, regulators and industry can formulate policies to foster gender diversity on corporate boards in India.

Originality/value

This study considers the recent regulatory norm introduced in India. This issue has still not been discussed and analyzed by researchers in India. It attempts to explain the impact a gender diverse board can make on a firm’s performance. It also makes valuable recommendations to improve the norms intended to more effectively foster gender diversity on corporate boards in India.

Keywords

Citation

Srivastava, V., Das, N. and Pattanayak, J. (2018), "Women on boards in India: a need or tokenism?", Management Decision, Vol. 56 No. 8, pp. 1769-1786. https://doi.org/10.1108/MD-07-2017-0690

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Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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