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Book part

Filip Fidanoski, Kiril Simeonovski and Vesna Mateska

Many organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board

Abstract

Many organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board diversity and firm’s financial performance. We use a sample of 35 companies from five countries in Southeast Europe (Macedonia, Croatia, Serbia, Bosnia and Herzegovina, and Greece) for the period between 2008 and 2012 to find that, on average, companies with well-educated board members are more profitable and overvalued on the market. When running the regression again to test the levels of heterogeneity, we also find that the companies with more women on board tend to be overvalued on the market, while those with more foreigners on board are subject of undervaluation. The paper mostly contributes to the literature on corporate governance and board diversity. First, we postulate the impact of each of the board diversity variables on the financial performance and then show the extent of this impact and its economic interpretation. Our findings have important practitioners’ implications for corporate regulators and policy-makers since the demonstrated positive impact of the well-educated board members on firm’s financial performance gives a new impetus in building a corporate strategy that will intend to engage more people holding PhD on board.

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Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

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Book part

Carolina Herrera-Cano and Maria Alejandra Gonzalez-Perez

This chapter aims to evaluate the relationship between the representation of women on corporate boards of directors and its impact on firm financial performance.

Abstract

Purpose

This chapter aims to evaluate the relationship between the representation of women on corporate boards of directors and its impact on firm financial performance.

Design/Methodology/Approach

This study utilized both a systematic review and a meta-analysis, using a sample of 40 published studies, which gleaned financial indicator and observation data from 28 different countries.

Findings

As indicated in previous studies, while positive, there was no significant correlation found between the number of women serving on the boards of directors and firm financial performance.

Research Limitations/Implications

The heterogeneity between the various studies analyzed may present difficulties in making general conclusions. The chapter could also be subject to publication bias, as the selection criteria included may indicate a need for further peer review. Future meta-analyses should include data associated with other financial indicators.

Practical Implications

This study shows how composition ratios of men/women serving on corporate boards should be addressed in terms of proving for a greater diversity of leadership perspectives.

Originality/Value

Previous systematic reviews and meta-analyses have analyzed country environments as moderators for the relationship between the representation of women on corporate boards and firm financial performance. The present study evaluates possible differences between the impact of the number of women serving on the board of directors on a variety of financial indicators (ROA, ROE, and Tobin’s Q).

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Article

Ronald J. Burke

Highlights the historical set‐up of Canadian boards of directors, whyand how women were first appointed to corporate boards. Examines factorsrelated to women serving on

Abstract

Highlights the historical set‐up of Canadian boards of directors, why and how women were first appointed to corporate boards. Examines factors related to women serving on corporate boards, detailing advantages and barriers to the appointments. Reports on a survey of Canadian Chief Executive Officers (CEOs) which considers factors related to the appointment of women to corporate boards. Results indicated the CEOs′ opinions on, for example, how important a variety of qualifications is to the appointment of female directors; the women with difficulties in finding women with these qualifications; preferred candidate profiles; issues which would benefit from a female perspective; effects of women on boards and companies; and the question of why there are not more women directors. Finally, with the survey as a background, looks at why there are so few women on the boards of directors of Canadian private sector organizations; and the future prospects of women as board members.

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Women in Management Review, vol. 9 no. 5
Type: Research Article
ISSN: 0964-9425

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Article

Peter Agyemang-Mintah and Hannu Schadewitz

The purpose of this paper is, first, to empirically examine whether the appointment of females (board gender diversity) to the corporate boards of UK financial…

Abstract

Purpose

The purpose of this paper is, first, to empirically examine whether the appointment of females (board gender diversity) to the corporate boards of UK financial institutions can improve firm value, and second, to examine whether having females on the boards of UK financial institutions can impact firm value during the pre-/post-global financial crisis periods.

Design/methodology/approach

The paper uses secondary data obtained from DataStream covering 63 financial institutions over a period of 12 years. A number of additional statistical estimations, including random effects and fixed effects, are conducted to test the robustness of the findings.

Findings

The outcome of this empirical research shows that the presence of females on the corporate boards of UK financial institutions has a positive and statistically significant relationship with firm value. The authors’ evidence reveals a positive and statistically significant impact on the firm’s value prior to the financial crisis, that is, during the pre-crisis period (2000-2006), meaning that women contributed significantly to the firm’s value. However, after the financial crisis, the presence of females on the board had no significant effect on the firm’s value. A reasonable explanation may be that, whilst the financial crisis was over in the period 2009-2011, the entire UK economy was still experiencing an economic downturn, and financial firms were no exception, irrespective of whether there was female representation on any corporate board. Overall, the findings are consistent with the prior studies.

Practical implications

The results have practical implications for governments, policy-makers and regulatory authorities, by indicating the importance of women to corporate success.

Originality/value

Despite several research projects on board gender diversity (BGD), this research is unique compared to the previous empirical studies, primarily because it is the first-time research of this nature is empirically ascertaining BGD and firm value in UK financial institutions, also during the pre-/post-financial crisis era. This paper contributes to the corporate governance literature by offering new insights on board diversity and firms’ value relationship. Overall, the results help fill any gaps on gender diversity and firm value in UK financial institutions.

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International Journal of Accounting & Information Management, vol. 27 no. 1
Type: Research Article
ISSN: 1834-7649

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Article

Bazeet Olayemi Badru, Nurwati A. Ahmad-Zaluki and Wan Nordin Wan-Hussin

The purpose of this paper is to examine whether the differences in men and women, such as risk aversion in decision making, can influence the amount of capital that the…

Abstract

Purpose

The purpose of this paper is to examine whether the differences in men and women, such as risk aversion in decision making, can influence the amount of capital that the board of directors can allocate for investment opportunities.

Design/methodology/approach

This study sampled 212 IPOs over the period of 2005–2015 and employed the OLS and the quantile regression techniques to examine the impact of female directors on capital allocation.

Findings

The results show that women on corporate boards have a positive influence on the amount of capital an IPO company can allocate for investment opportunities. These findings suggest that the investment strategies of women in an emerging financial market, like Malaysia, may differ from women in other financial markets.

Practical implications

The presence of women on corporate boards plays an important role in board involvement in a company’s strategic decision at the time of the IPO. Therefore, regulators and IPO issuers should pay close attention to the corporate governance structure of a company at the time of an IPO. In addition, investors and other stakeholders of a company may consider women on corporate boards as an important factor in financing and investment decisions.

Originality/value

Despite several studies that have examined the influence of women on corporate boards on corporate outcomes, globally, the presence of women on corporate boards and their influence on corporate decision-making related to allocation of capital to investment opportunities, have not been fully explored in the IPO literature.

Details

Management Decision, vol. 57 no. 3
Type: Research Article
ISSN: 0025-1747

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Article

Ronald J. Burke

Increasing research attention has been devoted to understanding the roles and responsibilities of boards of directors of North American corporations (Gillies, 1992; Lorsch…

Abstract

Increasing research attention has been devoted to understanding the roles and responsibilities of boards of directors of North American corporations (Gillies, 1992; Lorsch & Maclver, 1989; Fleischer, Hazard & Klipper, 1988). This has resulted, in part, from increased interest in corporate governance. Scholars continue to explore and debate the question of who controls and is responsible for the activities and performance of corporations in a democratic society (Vance, 1983; Worthy & Neushel, 1982). In addition, the veil of privacy that had historically been accorded CEOs and board members is slowly being lifted. As a result, information about the membership and working of corporate boards of directors is starting to accumulate (Gillies, 1992). Corporate boards of directors also came under increased scrutiny and criticism during the 1980s because of specific decisions made by them (e.g. hostile takeovers, mergers and acquisitions, golden parachutes, excessive levels of executive compensation) and the generally low performance levels of North American organisations in the international marketplace. The latter has resulted in several suggestions for improving the effectiveness of corporate boards (Barrett, 1993; Patton & Baker, 1987; Salmon, 1993; Leighton & Thain, 1993). Suggestions have included the separation of the CEO/Board chairman roles, improved selection of directors, training of directors, clarifying roles and responsibilities of directors (and CEOs), and replacing directors who are not performing well.

Details

Equal Opportunities International, vol. 12 no. 6
Type: Research Article
ISSN: 0261-0159

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Article

Varnita Srivastava, Niladri Das and Jamini Kanta Pattanayak

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…

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.

Details

Management Decision, vol. 56 no. 8
Type: Research Article
ISSN: 0025-1747

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Article

Sven Horak and Jingjing Cui

Recent legislation in Europe and North America encourages women’s participation in corporate boards based on the belief that gender-diversified boards contribute…

Abstract

Purpose

Recent legislation in Europe and North America encourages women’s participation in corporate boards based on the belief that gender-diversified boards contribute positively to firm performance and increased competitiveness. Contrary to the West, the women’s participation rate in business has been traditionally high in China. The purpose of this paper is to find out whether gender-diverse corporate boards of Chinese automotive firms perform better financially than gender-homogeneous boards.

Design/methodology/approach

By drawing on data from the Chinese Government and Bloomberg, the authors compare and analyze the differences in financial performance (return on equity, asset growth, sales growth) and risk behavior (debt risk, R&D expenditure) of Chinese automotive firms with and without women on their corporate board.

Findings

There is significant evidence that firms with women on the board perform better across all three categories, with the exception of return on equity, for which they found no significant differences among the analyzed firms.

Practical implications

While women’s participation in corporate boards in China is low, the results of this study suggest to policy makers and firms alike to implement measures that support gender-diversified boards in order to take advantage of their potential to increase corporate performance.

Originality/value

So far, the performance of corporate boards of countries with a traditionally high share of female participation in the workforce has rarely been analyzed. Research focusing on the Chinese automotive industry is new and underrepresented, although China is the largest automotive market worldwide and a key industry of the domestic economy. This investigation contributes to the literature stream on board diversity in as well as to industry-related studies. With the example of the Chinese automotive industry, it provides empirical evidence of better performance of firms with gender-diversified boards within the categories tested.

Details

Personnel Review, vol. 46 no. 4
Type: Research Article
ISSN: 0048-3486

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Article

Renuka Hodigere and Diana Bilimoria

The purpose of this study is to examine the importance of human capital and professional networks for women’s and men’s appointment to the boards of directors of public…

Abstract

Purpose

The purpose of this study is to examine the importance of human capital and professional networks for women’s and men’s appointment to the boards of directors of public companies. The study provides an in-depth analysis of how human capital and professional networks contribute to women’s as compared with men’s odds of corporate board membership.

Design/methodology/approach

The study analyzes the human capital and professional networks of 494 male and female corporate outside (non-executive) directors appointed between 2005 and 2010 to the boards of US public companies listed in the Standard & Poor’s 500 index. Human capital was measured as director age, education and professional experience (function and role). Professional network variables measured included composition of professional network, network centrality, constraint and cohesion.

Findings

The study’s findings reveal that the characteristics that impact the appointment of women as outside directors to public company boards differ from those of men. Relative to men, certain professions such as government relations and education improve the odds of appointment of women to corporate boards, while age lowers women’s odds. The number of network ties and the degree of network cohesion were also significant in predicting the likelihood of female board appointment to public corporations relative to men’s odds. The final model was able to predict female board membership correctly only in 28 per cent of the cases, while male board membership was predicted in 89 per cent of the cases, suggesting that factors other than human capital and professional networks (e.g. their gender) impact women’s appointment to corporate boards.

Originality/value

To the authors ' knowledge, this study is the first to comprehensively examine the professional network components of female and male directors along with their human capital in the analysis of their prospects for board appointment. The conceptualization of professional networks as well the depth of quantitative analysis of the network components of the study advance the extant literature on the composition of corporate boards.

Details

Gender in Management: An International Journal, vol. 30 no. 7
Type: Research Article
ISSN: 1754-2413

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Article

Jorge Moreno-Gómez and Jonathan Calleja-Blanco

The purpose of this paper is to analyze, in the Colombian developing context, the relationship between the presence of women in corporate positions and the financial…

Abstract

Purpose

The purpose of this paper is to analyze, in the Colombian developing context, the relationship between the presence of women in corporate positions and the financial performance of the company and to know if there are differences between family and non-family firms.

Design/methodology/approach

Building on the contingency theory of leadership, which emphasizes that leader’s personality and the situation in which that leader operates influences corporate decision-making, the authors use panel data models on a sample of 54 Colombian public businesses for the period 2008-2015 to test the proposed hypotheses on the relationship between women´s presence in corporate governance positions and financial performance, as well as the difference between family and non-family firms.

Findings

The results support that women´s presence in corporate governance positions is positively associated with firm performance. More concretely, the authors find a relationship between women at the top corporate governance structure (as part of the board of directors, top management team and chief executive officer) and firm profitability. Results also indicate that family business, as a type of organization, (negatively) moderates the positive relationship between female participation in top executive positions (board and top executive team) and firm performance.

Research limitations/implications

First, this study is limited to women in corporate positions in large companies listed on the Colombia Stock Exchange, and thus, generalizability for smaller entities may be limited. Second, data limitations do not allow us to investigate ways in which women’s presence in corporate governance structures contributes to improve firm goals.

Practical implications

The authors provide support to the hypothesis that positively relates women’s presence in corporate governance positions and firm performance for the case of Colombia. This serves as a guidance to Colombian regulators, corporate decision-makers and policy-makers to promote the inclusion of women in top hierarchical structures through either mandatory laws or recommendation.

Originality/value

Few studies have addressed the women´s presence in corporate governance positions and contribution to firm performance in developing economies. This study contributes to better understand how women impact performance in contexts where women are underrepresented in corporate governance structure and where there are no laws that pressure firms to appoint women in corporate governance positions.

Details

International Journal of Gender and Entrepreneurship, vol. 10 no. 1
Type: Research Article
ISSN: 1756-6266

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