Does board gender diversity affect capital structure decisions?

Saad, Sourour Ben; Belkacem, Lotfi

doi:10.1108/cg-12-2020-0575

Cited by 14 publications

(11 citation statements)

References 83 publications

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“…Furthermore, Menicucci and Paolucci (2022), Hurley and Choudhary (2020), Faccio et al (2016) and Huang and Kisgen (2013) documented that companies with a diverse executive level (especially board) are significantly more risk-averse. Related research by Ben Saad and Belkacem (2022) found that BGD affects capital structure decisions through this risk-taking channel. Chatjuthamard et al (2021) investigated the relationship between BGD and hostile takeover vulnerability and found a negative association between them.…”

Section: Literature Reviewmentioning

confidence: 94%

Board gender diversity and workplace diversity: a machine learning approach

Ranta

Ylinen

2023

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Purpose This study aims to examine the association between board gender diversity (BGD) and workplace diversity and the relative importance of various board and firm characteristics in predicting diversity. Design/methodology/approach With a novel machine learning (ML) approach, this study models the association between three workplace diversity variables and BGD using a social media data set of approximately 250,000 employee reviews. Using the tools of explainable artificial intelligence, the authors interpret the results of the ML model. Findings The results show that BGD has a strong positive association with the gender equality and inclusiveness dimensions of corporate diversity culture. However, BGD is found to have a weak negative association with age diversity in a company. Furthermore, the authors find that workplace diversity is an important predictor of firm value, indicating a possible channel on how BGD affects firm performance. Originality/value The effects of BGD on workplace diversity below management levels are mainly omitted in the current corporate governance literature. Furthermore, existing research has not considered different dimensions of this diversity and has mainly focused on its gender aspects. In this study, the authors address this research problem and examine how BGD affects different dimensions of diversity at the overall company level. This study reveals important associations and identifies key variables that should be included as a part of theoretical causal models in future research.

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Section: Literature Reviewmentioning

confidence: 94%

Board gender diversity and workplace diversity: a machine learning approach

Ranta

Ylinen

2023

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“…The first step is to measure the four characteristics of director efficacy individually, and these are based on the following metrics: Director independence is the ratio of independent and non-executive directors to the total number of the members of BoD (Bhat et al , 2018; Raimo et al , 2022; Nikulin et al , 2022). Female director representation is the percentage of female directors on corporate boards (Terjesen et al , 2016; Proenca et al , 2020; Saad and Belkacem, 2021). Director remuneration is the compensation the firm pays to BoD.…”

Section: Methodsmentioning

confidence: 99%

“…Female director representation is the percentage of female directors on corporate boards (Terjesen et al , 2016; Proenca et al , 2020; Saad and Belkacem, 2021).…”

Section: Methodsmentioning

confidence: 99%

Political connections and financial performance: the moderating role of director efficacy

Niazi

Othman

Chandren

2023

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Purpose Firm performance has become a thriving research field. However, a review of previous studies shows that the answers to several fundamental questions remain vague and require further investigation. Thus, the purpose of this study is twofold. The first is to determine the extent of the involvement of political connections (PCs) in Pakistani-listed companies, and the second is to examine the association between PCs and firm financial performance with director efficacy’s moderating role. Design/methodology/approach A data set of 221 non-financial companies listed on the Pakistan Stock Exchange for 10 years (2008–2017) was analysed using panel-corrected standard error regression. Additionally, the authors address endogeneity issue by using Hackman two-stage estimation and lagged variables regression. Findings The study found that PCs negatively affected the firm’s financial performance, and director efficacy as a moderator strengthened this relationship. The result is consistent with the political economy theory that argues that an unstable political system and a weak judicial system will strongly affect investors and their rights. Practical implications The impact of political influence on the corporate sector remains a concern for policymakers, regulators, investors, financial experts, auditors and academic researchers. This study’s findings are that an effective board of directors can strengthen the company’s best practices by controlling political connectedness to protect all the interested parties, particularly investors, and restore their confidence. Therefore, the results of this study can assist all stakeholders when a PCs exists to make the right decisions. Originality/value The study extends the literature in terms of theoretical contribution that uses an integrative approach to combine political economy theory, agency theory and resource dependence theory to address the moderating role of director efficacy with an association between PCs and firm financial performance. To the best of the authors’ knowledge, no extant research has investigated the association between PCs and firm financial performance using five aspects of PCs, along with moderator director efficacy.

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“…The independent variable consists of two sets of variables. The first set includes several CG mechanisms, namely, block ownership (Kaur and Gill, 2009), ownership concentration (Luo, 2015; Ben Saad and Belkacem, 2022), outsider blockholder (Core et al , 1999), board size (Ullah et al , 2019; Agyei-Mensah, 2022; Menicucci and Paolucci, 2022), board independence (Agyei-Mensah, 2021; Aladwey et al , 2022; Chatjuthamard et al , 2022; Gupta and Mittal, 2022) and CEO duality (Ghosh, 2006; Aldogan Eklund, 2022; Khan, 2022). The ownership variables block ownership and ownership concentration aids in estimating the distribution of power between large and minority shareholders (Kaur and Gill, 2009), whereas outsider blockholder capture the influence of the external type of blockholder on the COMP decision (Boone et al , 2011).…”

Section: Methodsmentioning

confidence: 99%

Corporate governance, CEO compensation, and corporate performance: evidence from India

Jatana

2022

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Purpose The purpose of this study is to examine the impact of corporate governance (CG) on chief executive officer compensation (CEO COMP) and pay–performance relationship (PPR) in Indian listed firms. Design/methodology/approach A sample of 196 companies listed on the S&P BSE 500 (Standard and Poor's Bombay Stock Exchange 500) Index has been analyzed using the panel (random effects) regression technique over the period 2010–2019. In addition, the system GMM technique was used to deal with the endogeneity issue. Findings The study found that block ownership and ownership concentration negatively impact COMP measures and PPR. Board size also had a negative direct and moderating impact on CEO COMP; however, the linkages were generally insignificant, especially for total pay. Similarly, outsider blockholders were found to be playing an insignificant role. Further, board independence positively influences COMP levels and PPR, though the results were mixed with respect to significance. Finally, CEO duality positively and significantly influences CEO COMP and PPR. A comparison before and after the new Indian Companies Act 2013 also revealed similar results, particularly in the after period. It suggests that the new legislative initiative was not effective enough in improving the CG and, hence, the alignment of pay with performance. Originality/value This study investigates the direct and moderating impact of CG on CEO COMP in the context of emerging economy India. Further, it makes a comparison before and after the introduction of the new governance reform, that is, the Indian Companies Act, 2013. Moreover, providing support to the entrenchment effect, the study reveals that large shareholders expropriate minority shareholders’ wealth by not aligning CEO pay with performance, making agency problems graver in emerging economies like India.

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Does board gender diversity affect capital structure decisions?

Cited by 14 publications

References 83 publications

Board gender diversity and workplace diversity: a machine learning approach

Board gender diversity and workplace diversity: a machine learning approach

Political connections and financial performance: the moderating role of director efficacy

Corporate governance, CEO compensation, and corporate performance: evidence from India

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