Does Gender Diversity in the Boardroom Improve Firm Performance? Evidence from Indonesia

Pasaribu, Pananda; Masripah, Masripah; Mindosa, Bonnie

doi:10.47291/efi.v65i1.597

Cited by 12 publications

(18 citation statements)

References 9 publications

(15 reference statements)

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“…Meanwhile, studies in the Indonesian context are limited. Pasaribu et al (2019) found that gender diversity is positively related to Indonesian firms’ financial performance. In contrast, Darmadi (2013) pointed out that having more women on the top executive management affects adversely on firms’ financial performance.…”

Section: Literature Reviewmentioning

confidence: 99%

Gender diversity and financial performance of Islamic banks

Jabari

Muhamad

2020

JFRA

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Purpose The purpose of this paper is to examine the influence of gender diversity among the board of directors (BOD) and Shariah supervisory board (SSB) members on the financial performance of Islamic banks in Indonesia and Malaysia. Design/methodology/approach Data for a sample of 19 Islamic banks for the period 2010–2018 were collected to test the research hypotheses using pooled ordinary least squares estimation method. Generalized least squares estimation method was used to confirm that the results are robust. This study lagged the explanatory variables by one period to control for potential endogeneity. Findings The findings suggest that Islamic banks with more gender-diverse BOD and SSB are expected to have better financial performance. In addition, this paper finds that an increase in Islamic banks’ size may undermine the positive impact of gender diversity among SSB members on Islamic banks’ financial performance. Research limitations/implications This study was conducted only on Islamic banks in Indonesia and Malaysia owing to data constraints; thus, the results may not be generalizable to Islamic banks in other countries. Practical implications Improving financial performance is crucial for banks, especially for Islamic banks, to sustain their fast-growing share globally. Therefore, the findings of this study are expected to provide insight and understanding in the selection and appointment of BOD and SSB members at Islamic banks. Social implications By having women represented in the BOD and SSB, Islamic banks will benefit equally from valuable abilities across demographic groups in the society. Furthermore, if the members of the BOD and SSB are properly selected, Islamic banks with more gender-diverse boards can effectively contribute to enhancing social welfare of various segments in the society. Originality/value This is the first study, as far as is known to the authors, that provides empirical evidence on the influence of gender diversity among BOD and SSB members on the financial performance of Islamic banks. This paper is expected to be used as a reference by the shareholders and customers of Islamic banks in ensuring that the BOD and SSB have the best optimal composition that maximizes their profits.

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Section: Literature Reviewmentioning

confidence: 99%

Gender diversity and financial performance of Islamic banks

Jabari

Muhamad

2020

JFRA

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“…The study argued the negative influence of female boards on all listed companies' market performance in Indonesia. Passaribu et al (2019) mentioned that female directors' composition in the 100 biggest Indonesian listed companies remained the same from 2012 to 2014 at 11%-12%. The study found that even though females on board can JAEE 13,2 positively impact firm profit, women's participation on the board is still low.…”

Section: Working Capital Management and Firm Performancementioning

confidence: 99%

“…The study argued the negative influence of female boards on all listed companies' market performance in Indonesia. Passaribu et al . (2019) mentioned that female directors' composition in the 100 biggest Indonesian listed companies remained the same from 2012 to 2014 at 11%–12%.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Working capital management and board diversity towards firm performances in Indonesia's LQ45

Hatane

Winoto²,

Tarigan³

et al. 2022

JAEE

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PurposeThis study examines the effect of working capital management and board diversity on firm profitability and firm value for a sample of Indonesian firms listed in the LQ45 index. The interaction of board diversity components with working capital management adds a comprehensive discussion to enhancing working capital management efficiency.Design/methodology/approachThis study engages a panel multiple regression method. Data from a sample of LQ45 companies from 2010 to 2016 are analysed using a fixed and a common effect model. Board diversity is further analysed in interaction variables, whether it holds the moderating role in the relationship of working capital and firm performances. This study operates return on capital employed (ROCE) as the proxy of profitability performance and EVA-Spread for the firm's value performance. The simultaneous effect test is used for the robustness test.FindingsThe results indicate that working capital management and board diversity have no significant impact towards profitability. However, they significantly positively impact firm value, meaning that the market is attracted by effective working capital management and board diversity. However, the interaction variable analysis shows that gender diversity and education level diversity weaken the impact of working capital management towards firm value.Research limitations/implicationsThis study is not limited to one industry; therefore, future studies may focus on one industry and detect the pattern of working capital components in the particular industry. This study focuses on quantitative numbers to explain board diversity's interaction in working capital management to maximise shareholders' wealth. Future studies may consider a qualitative discussion to describe the quality of women's presence on the board, education level and educational background of board members.Originality/valueUnlike most studies in which authors relate working capital and board diversity to firm performances separately, this study combines both components and analyses whether board diversity can act as a moderator effect. As part of corporate governance, it is expected that board diversity can enhance working capital management efficiency.

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“…Several board diversity studies in Indonesia found that increasing gender diversity in the boardroom has a beneficial effect on firm performance. Firms with two or more women in the boardroom have a stronger impact on firm performance than firms with only one woman in the boardroom (Pasaribu et al , 2019; Syamsudin et al , 2017). The presence of women in the governance function can reduce the agency problem in the company and reduce the practice of earnings manipulation because of the relevance of ethical and moral issues(Razak and Helmy, 2020).…”

Section: Introductionmentioning

confidence: 99%

Why are not men and women more alike? Gender and clawbacks in the trade-off between accrual and real activity earnings manipulation

Sari

Sholihin

Zuhrohtun

et al. 2023

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Purpose The purpose of this study is to examine the trade-off between accrual and real activity earnings manipulation by considering gender and punishment as one aspect of clawbacks. Design/methodology/approach To achieve the research objectives, experimental design research was used, involving 183 professional accountants in Indonesia. This was followed by interviews with board members of public companies in Indonesia. Findings After the adoption of clawbacks, the intention to manipulate accruals decreased more among women than among men. However, the possible unintended consequences of clawbacks, particularly an increase in real activity manipulation, did not differ between women and men. Originality/value There are still few studies that use experimental designs to examine the consequences of clawback. Our study is expected to provide a novel contribution to the literature on the consequences of clawbacks as we use an experimental method. Besides, previous research that tested the consequences of clawback, using both archival and experimental data, had not considered the gender aspect, thus prompting this study to fill the research gap related to the consequences of clawback adoption by including the gender variable.

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Does Gender Diversity in the Boardroom Improve Firm Performance? Evidence from Indonesia

Cited by 12 publications

References 9 publications

Gender diversity and financial performance of Islamic banks

Gender diversity and financial performance of Islamic banks

Working capital management and board diversity towards firm performances in Indonesia's LQ45

Why are not men and women more alike? Gender and clawbacks in the trade-off between accrual and real activity earnings manipulation

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