Board gender diversity and firms’ equity risk

Abstract

Purpose There is a growing attention toward the importance of women’s participation on corporate boards in enhancing board governance and decision-making quality. The literature lacks sufficient empirical evidence on the relationship between women’s involvement on boards and firms’ risk. The purpose of this paper is to investigate the influence of board gender diversity on firms’ risk. Design/methodology/approach This paper explores the influence of women’s participation on corporate boards on firms’ stock return volatility. The examined firms are all non-financial firms listed on the FTSE 350 index between 2008 and 2013. The Bloomberg database is used to collect the needed variables. Panel data are employed through a regression model to estimate relationships. One-step Arellano and Bond and the generalized method of moments are used to control for reverse causality and the existence of endogenous variables. Findings The results suggest that women’s participation on corporate boards favorably impacts firms’ risk by reducing firms’ stock return volatility. The authors also find that the influence of women on reducing stock return volatility is higher in four particular industries recognized by their close proximity to consumers (consumer goods, consumer services, health care, and utilities). Originality/value The study contributes to the growing literature on women on boards and offers solid empirical evidence of the correlation between board gender diversity and firms’ risk. The empirical results provide economical and statistical validity to the “voluntary business-led” approach of Davies reports and to the recommendation by the UK Corporate Governance Code 2014 on the favorable influence of board gender diversity for effective functioning.

The Domestic Tethering of Lebanese and Arab Women Journalists and News Managers

“…The media frenzy surrounding the landmark 1991 Hill-Thomas sexual harassment controversy in the U.S. (McAdams and Beasley 1994) sparked a flurry of research on gendered practices in the workplace (Fitzgerald and Shulman 1993;Harned et al 2002). Since then, scholars delved deeper into gendered workplace substructures and practices in news organizations around the world, both through country-specific investigations and cross-cultural comparisons (Arayssi, Dah, and Jizi 2016;Byerly 2011;Byerly and Ross 2006;Carter 1998;Djerf-Pierre 2005;El Haddad, Karkoulian, and Nehme 2018;Hanitzsch and Hanusch 2012;Jizi and Nehme 2017;Maamari and Saheb 2018;Maamari and Shouweiry 2016;Melin-Higgins 2004;Ross 2014;Steiner 1998;Van Zoonen 1998).…”

Restrictive and Supportive Mechanisms for Female Directors’ Risk-Averse Behavior: Evidence From South Asian Health Care Industry

“…Board gender diversity is the independent variable of this study. A wide range of studies has measured this variable by the percentage of women on the board (Adams & Ferreira, 2009;Campbell & Mínguez-Vera, 2008;Jizi & Nehme, 2017;Lenard et al, 2014). We have also adopted an alternative proxy to measure gender diversity, that is, 1 if there is a female board member in a given year, 0 otherwise.…”

“…*p < .05. Jizi & Nehme, 2017;Lenard et al, 2014). We believe that despite a lower level of representation, South Asian women on the board can improve the quality of the board's decisions (Singh & Vinnicombe, 2004), restrict managerial opportunism (Sabatier, 2015), take neutral and independent decisions to balance the interests of multiple shareholders (Liao et al, 2015;Lückerath-Rovers, 2013), and thereby, restrict excessive risk taking in a firm.…”

“…They argued that women on the board influence firm risk by contributing to lower variability of the stock market return. Furthermore, Jizi and Nehme (2017) examined nonfinancial firms listed on the Financial Times Stock Exchange (FTSE) 350 index from the years 2008 to 2013. Using the generalized method of moments (GMM) and the one-step Arellano and Bond technique, the authors revealed that gender diversity reduces the firm's equity volatility, especially in utilities, health care, consumer services, and consumer goods industry.…”

Managers’ Competences in Private Hospitals for Investment Decisions during the COVID-19 Pandemic

“…The initial level of investment is the main way to reduce the weight of project risks in private hospitals [2]. The definition of risk found here is observed in different contexts, such as risks that affect institutions' financial performance [3] and the volatility of companies' stock returns [4], as well as risks associated with organizational decision-making on investment and agency costs due to withholding information [5].…”