Does the Cultural Dimension Influence the Relationship between Firm Value and Board Gender Diversity in Saudi Arabia, Mediated by ESG Scoring?

Abstract

The scarcity of female directors on Saudi boards is linked to cultural and social barriers deeply rooted in traditional masculine norms. Our study investigates the mediating role of ESG scores in the relationship between board gender diversity and firm value within the Saudi context. The Structural Equation Model (SEM) was utilized based on a sample of 54 Saudi-listed financial companies on (Tadawul) during 2021–2022. The study unveiled a negative correlation between female director presence and Saudi firm value. This association is attributed to the prevailing male-dominated Saudi societal norms, where boards with more female members may hesitate to prioritize performance-driven actions due to concerns about their perceived legitimacy within traditional gender roles. Conversely, a positive correlation was observed between female director presence and ESG scores, aligning with existing research highlighting the role of board gender diversity in improving sustainability performance. The sustainability framework prevails over the influence of gender diversity, fully integrating it within the broader context of sustainability to enhance the value of Saudi companies. Our results are consistent when considering alternative measures of firm value. Our findings offer valuable insights for investors assessing board gender diversity’s impact on company value and emphasize the role of gender diversity in enhancing sustainability. They suggest that greater female representation on boards is vital for ESG score improvement, promoting sustainable initiatives and overall firm value. This calls for policymakers to promote sustainability disclosures and establish guidelines for increased female board participation, considering the absence of mandatory quotas.

Does ESG Performance Affect the Enterprise Value of China’s Heavily Polluting Listed Companies?

“…Meanwhile, in order to investigate the mechanism effect between ESG performance and the enterprise value, this paper introduces mediating variables to construct model (2) based on the mediation effect test method [57]:…”

“…where Med stands for the mediating variables green technology innovation (Gre), financing cost (Fc), and internal control (Inc), i stands for individual firms, and t stands for year; ∝ 0 is the intercept term, and ε i,t is the random error term. In the empirical analysis, a benchmark regression is conducted for model (1), followed by a mechanism test for model (2).…”

“…Although there have been many studies on the impact of ESG performance on corporate value at home and abroad, the research conclusions are different, and overall they can be divided into three types: First, researchers believe that ESG and corporate value are positively correlated, and ESG will promote the increase of corporate value [1][2][3][4]. With a change of research variables, ESG has a positive nonlinear (U-shaped) impact on enterprise value [5].…”