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Article
Publication date: 25 July 2019

Muhammad Usman, Muhammad Umar Farooq, Junrui Zhang, Nanyan Dong and Muhammad Abdul Majid Makki

The purpose of this paper is to investigate the crucial question of whether gender diversity in boardroom is associated with CEO pay and CEO pay-performance link.

Abstract

Purpose

The purpose of this paper is to investigate the crucial question of whether gender diversity in boardroom is associated with CEO pay and CEO pay-performance link.

Design/methodology/approach

The authors used the data of companies listed on the Pakistan Stock Exchange for a sample consisting of KSE-100 index companies for the period of five years. The authors used the ordinary least square regression technique to test the developed hypotheses. The authors also used the two-step Heckman selection model, two-stage least square regression and propensity score matching method to control the problem of endogeneity.

Findings

The authors find reliable evidence of a negative association between gender diversity and CEO pay and of board gender diversity’s strengthening the relationship between CEO pay and firm performance. The authors also find that women director are more effective in setting the optimal contract in non-family-owned firms and firms with dispersed ownership structure as compared to family-owned firms and firms with concentrated ownership structure. Moreover, results also reflect that the influence of board diversity on both CEO pay and CEO pay-performance link is stronger when gender diversity goes beyond tokenism.

Practical implications

The findings have implications in terms of providing the basis for policy makers to accord the same level of importance to gender diversity in the boardroom as well as contributing to the current debate on the desirability of mandating or recommending gender diversity on boardrooms.

Originality/value

This study is among the few studies which investigate the moderating role of boardroom gender diversity on the CEO pay-performance link. In addition, this study contributes to the institutional theory by providing the empirical evidence that the effect boardroom gender diversity on CEO pay and CEO pay-performance link varies by type of ownership.

Details

International Journal of Manpower, vol. 40 no. 7
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 30 April 2019

Muhammad Usman, Muhammad Umar Farooq, Junrui Zhang, Muhammad Abdul Majid Makki and Muhammad Kaleem Khan

This paper aims to investigate the question concerning whether gender diversity in the boardroom matters to lenders or not?

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Abstract

Purpose

This paper aims to investigate the question concerning whether gender diversity in the boardroom matters to lenders or not?

Design/methodology/approach

To answer this question, the authors use the data from 2009 to 2015 of all A-share listed companies on the Shanghai and Shenzhen stock exchanges. The authors use ordinary least squares regression and firm fixed effect regression to draw our inferences. To check and control the issue of endogeneity the authors use one-year lagged gender diversity regression, two-stage least squares regression, propensity score matching method and Heckman two-stage regression.

Findings

The results suggest that the presence of female directors on the board reduces managerial opportunistic behavior and information asymmetry and, consequently, creditors’ perceptions about the probability of loan default and the cost of debt. The authors find that lenders charge 4 per cent less from borrowers that have at least one female board member than they do from borrowers with no female board members. The authors also find that the board structure (i.e. gender diversity) of government-owned firms also matters to lenders, as government-owned firms that have gender-diverse boards have a lower cost of debt (i.e. 5 per cent lower interest rate).

Practical Implications

The findings have implications for individual borrowers and for regulators. For example, borrowers can get debt financing at lower rates by altering their boards’ composition (i.e. through gender diversity). From the regulatory perspective, the results support recent legislative initiatives around the world regarding female directors’ representation on boards.

Originality Value

This paper makes several contributions. First, beyond the recent studies on boardroom gender, the authors investigate the relationship between gender diversity in the boardroom and the cost of debt. Second, the authors extend the literature on the association between government ownership and cost of debt by first time providing evidence that the board composition (e.g. gender diversity) of government-owned firms also matters to the lenders. The other contributions are discussed in the introduction section.

Details

Managerial Auditing Journal, vol. 34 no. 4
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 6 November 2017

Muhammad Nadeem, Tracy-Anne De Silva, Christopher Gan and Rashid Zaman

This paper aims to investigate the relationship between boardroom gender diversity and intellectual capital (IC) efficiency in China – while the previous literature…

Abstract

Purpose

This paper aims to investigate the relationship between boardroom gender diversity and intellectual capital (IC) efficiency in China – while the previous literature focuses only on traditional accounting-based performance measures such as return on assets or Tobin’s Q.

Design/methodology/approach

A well-developed Arrelano–Bond generalised method of moment (GMM) is applied to account for endogeneity – mainly because of simultaneity and unobserved heterogeneity. Moreover, this study uses an adjusted-value added intellectual coefficient (VAIC) model to measure the IC efficiency of 906 Chinese listed firms for 2010-2014.

Findings

The empirical analysis shows a significant relationship between gender diversity and IC efficiency, in static ordinary least square estimation, but this disappears when endogeneity is accounted for using dynamic GMM. This insignificant relationship remains consistent, even when two alternative proxies of gender diversity, i.e. the Blau index and the women dummy, are used.

Practical implications

This study provides some useful insights into the traditional Chinese corporate structure where females cannot use their powers to bring corporate changes in firms. The findings show that gender-related stereotypical attitudes continue to exist in China. The regulators, therefore, should look into strengthening gender related regulations – which are currently non-existent in China.

Originality/value

This is the first study of its kind to investigate the relationship between gender diversity and IC efficiency in China using the A-VAIC model and GMM to mitigate endogeneity.

Details

Pacific Accounting Review, vol. 29 no. 4
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 6 October 2021

Ayman Issa and Mohammad A.A. Zaid

Drawing on the multi-theoretical perspective, the primary purpose of this paper is to empirically investigate the inextricably entwined nexus between board gender diversity

Abstract

Purpose

Drawing on the multi-theoretical perspective, the primary purpose of this paper is to empirically investigate the inextricably entwined nexus between board gender diversity and corporate environmental performance within cross-country context.

Design/methodology/approach

Multiple regression analysis on a cross-country panel data analysis was used. Further, the authors applied static panel data estimator ordinary least squares (OLS) as a baseline model with different proxies of gender diversity. In addition, to control for the potential endogeneity problem and providing robust findings, the authors run two-stage least squares (2SLS) and lagged independent variables.

Findings

The findings clearly unveiled that corporate environmental performance is positively and significantly affected by the level of gender diversity on board. This inextricable and intimate nexus is vastly attributed to the argument that female directors show greater concerns for eco-friendly activities.

Practical implications

The findings of this study provide useful and fruitful insights for regulatory parties and policymakers to mandate gender quota in electing boardroom members to ameliorate corporate environmental performance.

Originality/value

To the best of the authors’ knowledge, most of the prior studies have not yet provided a multi-theoretical analysis of the effect of board gender diversity on environmental performance. Thereby, this study handled this contemporary gap and went beyond the narrow perspectives by diving deep with cross-country analysis.

Details

International Journal of Accounting & Information Management, vol. 29 no. 4
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 30 November 2020

Yosra Mnif and Imen Cherif

This paper aims to examine the impact of female board directorship on the extent of earnings management.

Abstract

Purpose

This paper aims to examine the impact of female board directorship on the extent of earnings management.

Design/methodology/approach

The research hypotheses have been tested using both univariate and multivariate analyzes based on a sample of 198 firm-year observations from closely-held family firms listed on the SBF 120 over the period 2010–2018.

Findings

The empirical results first indicate that female board participation reduces the level of earnings management. When looking at women positions in the companies’ boardrooms, the authors reveal that the negative linkage between female board directorship and earnings management remains constant for independent female directors while the opposite holds for their family-affiliated counterparts. Further, the gender quota reform is shown to mitigate the adverse relationship between gender-diverse corporate boards and the extent of earnings management. These results seem sound, as they hold unchanged for the several measures of, both, boardroom gender diversity and earnings management used in the empirical study. In a supplementary analysis, the authors provide evidence that the association between the presence of women directors on the companies’ boards and earnings management depends, in a different way, on the size of the audit firm in a joint auditing context.

Originality/value

The country and the period considered in this paper are noteworthy characteristics that enhance the value of this research. The present study is relevant because it examines the relationship between female boardroom participation and earnings management using a homogeneous sample of family-owned and -managed companies within which shareholders and board members share identical motives for manipulating earnings in one of the leading countries in the world with regard to family ownership dominance (i.e. France). Moreover, this paper is considered to be very timely, as it explores, contrarily to previous related studies, the years following the implementation of a mandatory gender quota reform in one of the less available countries, to date, that have amended a gender quota law. To the knowledge, besides France, there are a few markets (Norway, Belgium, Finland and Iceland) that have implemented such legislation.

Details

Pacific Accounting Review, vol. 33 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 29 November 2019

Nadia Loukil, Ouidad Yousfi and Raissa Wend-kuuni Yerbanga

The purpose of this paper is to investigate the effect of female members in boards of directors on asymmetric information in the French stock market.

Abstract

Purpose

The purpose of this paper is to investigate the effect of female members in boards of directors on asymmetric information in the French stock market.

Design/methodology/approach

The authors use two proxies for asymmetric information: the idiosyncratic volatility and the bid-ask spread. This study is conducted on all listed firms in the SBF 120 index between 2002 and 2012.

Findings

Results show that gender diversity in boardrooms has a negative effect on the level of private information in stock markets and reduces the bid-ask spread. However, these effects are significant in family-controlled firms: female inside directors significantly increase the idiosyncratic volatility and the bid-ask spread, while female independent directors decrease both proxies for stock market liquidity.

Research limitations/implications

Our empirical findings contribute to the current debate on the benefits of gender diversity on corporate boards from the market perspective. It shows that, under specific conditions, financial markets could be receptive to the presence of female directors in boardrooms.

Practical implications

Practitioners and policymakers advocate the benefits of gender diversity on corporate boards. This paper shows that when the protection of minority shareholders is poor, the stock market is receptive to the presence of women independent directors, only in family controlled firms. This is a further argument that could help women to overcome glass-ceiling barriers they usually face to achieve top management positions.

Originality/value

This paper provides support for the increased attention paid to gender-diverse boards. It addresses the market sensitivity toward the presence of women members in French boardrooms and their positions. This is the first paper, to the best of our knowledge, to address how appointing women to different positions in the boardroom could provide signals to investors in the presence of asymmetric information. French firms are mostly family controlled. Thus, the findings bring valuable information of the impact of board diversity on the stock market considering family and nonfamily firms.

Details

Journal of Family Business Management, vol. 10 no. 2
Type: Research Article
ISSN: 2043-6238

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Article
Publication date: 11 October 2021

Narander Kumar Nigam, Kirtivardhan Singh and Purushottam Arya

The existing literature point that the presence of women directors in a firm reduces its risk. However, the relation between boardroom gender diversity and a firm’s return…

Abstract

Purpose

The existing literature point that the presence of women directors in a firm reduces its risk. However, the relation between boardroom gender diversity and a firm’s return is widely disputed leading to no concrete answer. Some studies mention that women directors have a positive impact on firm performance, whereas, on the other hand, some findings suggest that women directors reduce financial performance. This paper aims to study the relationship of firm risk and return with boardroom gender diversity and the net impact on firm performance in the Indian context. This study uses not only traditional measures of risk and return but also the third measure of risk-adjusted returns to postulate its findings.

Design/methodology/approach

Based upon the data of the top 100 of the Bombay Stock Exchange-500 firms for the period FY 2009–2010 to FY 2018–2019, this study applied fixed effect panel regression and random effects Tobit regression to examine the effect of board gender diversity on firm performance.

Findings

The study concludes that firms with women directors on board have lower risk and lower returns. It also results in a higher risk-adjusted return, creating a positive impact on a firm’s performance.

Originality/value

The paper contributes to the existing literature on corporate governance by considering return, risk and risk-adjusted returns in single research to have a holistic measure of firm performance. It provides empirical evidence from one of the largest emerging economies, India where the female director and independent female director have been introduced recently.

Details

Journal of Indian Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4195

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Article
Publication date: 28 August 2021

Ridhima Saggar, Nischay Arora and Balwinder Singh

The study aims to pervade the gap in the domain of risk disclosure and gender diversity, which is comparatively uncharted. Gender diversity being a crucial element of…

Abstract

Purpose

The study aims to pervade the gap in the domain of risk disclosure and gender diversity, which is comparatively uncharted. Gender diversity being a crucial element of corporate governance can deepen understanding on the issue in the backdrop of a developing country such as India, so this study aims to investigate the relationship between gender diversity on board and corporate risk disclosure.

Design/methodology/approach

Four measures of gender diversity, i.e. BLAU index, SHANNON index, proportion of women directors on board and female dummies, have been deployed to measure gender diversity. The empirical analysis is premised on a sample of S&P BSE 100 index pertaining to the 2018–2019 financial year; which eventually gets reduced to 70 non-financial firms after eliminating 30 financial firms. To examine the impact of gender diversity on corporate risk disclosure, hierarchical regression has been used. Additionally, two-stage least square regression analysis has been performed for checking the endogeneity issues in data and validating the findings of the study.

Findings

The main findings unveil that gender diversity positively impacts corporate risk disclosure. Confirming the agency theory and resource dependency theory, its alternative measures like BLAU index, SHANNON index, proportion of women directors and female dummy divulged to positively impact corporate risk disclosure. When women dummy has been used, analysis unmasked that firms electing more than one female director on board has a higher positive impact on corporate risk disclosure as compared to firms engaging only one women director on board.

Research limitations/implications

The study is undertaken in the Indian settings, which has its own set of legislative laws, whereas there is need to reaffirm the relationship applying cross-country analysis. Furthermore, there is huge hollowness in the domain of gender diversity and risk disclosure that calls for empirical evidence to unearth futuristic vision.

Practical implications

The research presents managerial implications for the managers to promote gender egalitarianism by electing higher quantum of women directors on board to achieve global standards of maintaining higher risk disclosure. Adequate risk disclosure on a gender-diverse board further assures the investors that their interest will remain intact in the organization that meets legal requirements by embracing gender equality in employment. A woman in the boardrooms incarnates transparency through divulgence of risk information, which suffices the informational needs of investors. In addition, the findings insists the regulators towards staunch enforcement of effective corporate governance practice through increasing the proportion of women directors on board as they assist in dispelling risk disclosure, which will avert sceptical ambitions of managers and deconstruct their stereotype attitude towards women.

Originality/value

This study is a novel contribution in expanding the risk disclosure literature by analyzing the unexplored impact of gender diversity on the extent of corporate risk disclosures in India.

Details

Gender in Management: An International Journal , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-2413

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Article
Publication date: 29 July 2020

Qurat Ul Ain, Xianghui Yuan, Hafiz Mustansar Javaid, Muhammad Usman and Muhammad Haris

The purpose of this research is to examine whether board gender diversity reduces the agency costs of firms in the context of Chinese listed firms.

Abstract

Purpose

The purpose of this research is to examine whether board gender diversity reduces the agency costs of firms in the context of Chinese listed firms.

Design/methodology/approach

This paper uses a large sample of 23,340 firm-year observations of Chinese listed companies during 2004–2017. The authors use ordinary least squares regressions as the primary methodology with a wide range of methods to control for endogeneity and to check robustness, including the fixed-effect method, instrumental variable approach, lagged gender diversity measures, propensity score matching, Blau index, Shannon index and industry-adjusted measures of agency costs.

Findings

The evidence reveals that the participation of female directors in corporate board reduces agency costs, which correlates with conflicts of interest. Moreover, gender-diverse boards are more effective in state-owned enterprises (SOEs), in which agency issues are more severe. Female directors also provide better monitoring roles in more-developed areas. Finally, corporate boards that have a critical mass of female directors have a greater tendency to reduce agency costs as compared to their token participation. Overall, all findings support the validity of agency theory.

Practical implications

This study shows the economic benefit of female directors in the boardroom by reducing agency costs and by improving firms' governance structure. Regarding the government, which is gradually introducing board gender diversity policies, this study provides valuable pragmatic information for Chinese regulators on this issue.

Originality/value

This study extends the literature by providing evidence that gender diversity in boardroom matters for shareholders' wealth maximization. It provides novel evidence that a critical mass of female directors is more effective in reducing agency costs compared to a single female on the board, and that the effect of gender diversity varies in relation to ownership structure and region.

Details

International Journal of Emerging Markets, vol. 16 no. 8
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 16 July 2019

Esteban Lafuente and Yancy Vaillant

The purpose of this paper is to analyzes how board’s gender diversity, and more specifically a gender-balanced configuration – i.e. a proportion of women in the boardroom

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1174

Abstract

Purpose

The purpose of this paper is to analyzes how board’s gender diversity, and more specifically a gender-balanced configuration – i.e. a proportion of women in the boardroom ranging between 40 and 60 percent – affects economic and risk-oriented performance in financial firms.

Design/methodology/approach

The empirical application uses a rich data set that includes detailed accounting and organizational information for all financial firms in the Costa Rican industry during the period 2000–2012. The proposed hypotheses are tested using panel data (fixed-effects) regression models that emphasize that bank performance is affected by various dimensions of the banks’ gender diversity.

Findings

The longitudinal analysis of the Costa Rican banking industry reveals that, unlike a proportion indicating a particular critical mass of women on the board, a balanced gender configuration yields superior economic performance (ROA and net intermediation margin). Additionally, the findings show that the performance benefits of gender diversity only exists in the presence of a gender-balanced board configuration, and that this positive effect is not conditioned by the presence of women leadership in the corporate hierarchy (Chair or CEO).

Originality/value

The paper further explores the influence of board gender diversity on organizational performance by adopting an approach to the gender diversity–performance relationship that goes beyond the mere representation of women within the corporate hierarchy.

Details

International Journal of Manpower, vol. 40 no. 5
Type: Research Article
ISSN: 0143-7720

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