Executives’ gender-diversity, education, and firm’s bankruptcy risk: Evidence from China

Cho, Eunho; Okafor, Collins E.; Ujah, Nacasius U.; Zhang, Linmei

doi:10.1016/j.jbef.2021.100500

Cited by 26 publications

(21 citation statements)

References 63 publications

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“…The results buttress the point stressed by Adams and Ferreira (2009) that female directors enhance the effectiveness of the board in making decisions through enhanced monitoring and advisory functions that lead to long-term sustainability and reduced risks of companies becoming financially distressed. The results are also in line with the large stream of literature on the positive impact of female directors on company performance (Aggarwal et al, 2019;Amin et al, 2022) and the negative effects on financial distress (Cho et al, 2021;Zhou, 2019), among others. The results are also consistent with Tahir et al's (2021) study in Pakistan, which shows that female directors have a positive impact on the financial stability of Pakistani companies.…”

Section: Discussionsupporting

confidence: 88%

“…Similar results were documented by Mittal and Lavina (2018), who used a sample of Indian family companies. In another related study on female executives in the top management team, Cho et al . (2021) showed that a negative association exists between the ratio of female executives and the company's bankruptcy risk, indicating that the higher the proportion of female executives, the lower the bankruptcy risk.…”

Section: Literature Reviewmentioning

confidence: 99%

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Gender diversity and corporate financial distress in the Pakistan stock market: the interacting effect of family-controlled companies

Muien,

Nordin,

Badru

2023

JFBM

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PurposeAs the benefit of gender diversity continues to receive significant attention, a holistic investigation of its effect on corporate financial distress (CFD) is lacking. Therefore, this study examines the effects of board gender diversity, measured in different forms, such as the presence and proportion of female directors, family-affiliated female directors and the chief executive officer (CEO) gender, on CFD in Pakistan. The study also investigates the interacting effects of family-controlled (20 and 50% family-owned) companies on the association between board gender diversity and CFD.Design/methodology/approachThe study applied the pooled cross-sectional logistic regression model to examine the effect of board gender diversity (presence and proportion of female directors, family-affiliated female directors and CEO gender) on CFD through a sample of 285 non-financial companies in Pakistan over the period of 2006–2017.FindingsThe results reveal that gender diversity on boards is significantly and negatively associated with CFD in Pakistan. In addition, when family ownership is 50% or more, the interacting effect of family control is found to be significant, while gender effects remain negative. The results suggest that female directors contribute to the long-term viability of companies, especially family-owned companies. Female directors are also found to be more prevalent in family-owned companies compared to their non-family counterparts.Research limitations/implicationsThe findings imply that female directors may efficiently manage and control all functions necessary to guarantee the company's long-term prosperity. Similarly, gender effects can outweigh the detrimental impact of family control when female directors are in reasonable numbers and of high quality in the boardroom.Practical implicationsThe practical relevance of the findings is that female directors play a significant role on the corporate board. Thus, it is a wakeup call for Pakistani companies to recognize the critical role and uniqueness of women on the corporate ladder. Family companies can also galvanize on the uniqueness of women to improve their governance structure.Originality/valueThis study adds to the literature on the benefits of gender diversity in family and non-family-owned companies. Specifically, this study applied multiple measures of gender diversity and family control in a single study. In addition, the study was conducted in a country that is ranked as the second worst country in the Global Gender Gap Index 2022, implying that investigating this type of research would go a long way towards changing the minds of corporate executives and regulators about the critical role that women can play in the economy.

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Section: Discussionsupporting

confidence: 88%

Section: Literature Reviewmentioning

confidence: 99%

Gender diversity and corporate financial distress in the Pakistan stock market: the interacting effect of family-controlled companies

Muien,

Nordin,

Badru

2023

JFBM

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“…Since instrument variables need to have a high correlation with MA but less correlated with the working capital management proxy (CCC), extending Cho et al (2020), we interact the forty-eight Fama-French industry average of MA and the States of domicile for the firms as instrument variables. The interaction term, while correlated with a MA, it may not influence a firm's working capital management.…”

Section: Robustness Testsmentioning

confidence: 99%

Working capital management and managerial talent

Ujah

Tarkom

Okafor

2020

IJMF

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PurposeTalented managers arguably remain quintessential to firm value and performance. While the literature offers evidence for the long-term orientation of talented managers, there is a paucity of evidence on the short-term performance of managers. Here, we examine the relationship between managerial talent and working capital management (WCM).Design/methodology/approachThis study primarily employs a panel fixed-effect method controlling for firm-year and firm-industry for non-financial and non-utility firms for the years 1980 through 2016. Also, the authors control of potential bias that may impact the result. These controls include social capital, financial constraints and tests for endogeneity and spurious correlation.FindingsThe authors find the association between managerial talent and WCM to be positive and significant. The results indicate that talented managers have a higher cash conversion cycle. The empirical evidence still holds after controlling for social capital, religiosity and financial constraints. Also, the evidence still holds by employing an interaction term between Tobin's Q as a proxy for investment opportunities and talented managers.Practical implicationsThe finding may lend credence to executive contracts. Human nature, by default, is only vested on a net benefit for self-aggrandization. Self-aggrandization can be evident through structures in managerial contracts. These contracts usually tie consequences to long-term growths. If a benefit is offered based on short-term operational goals, talented managers may do more to the management of working capital.Originality/valueIn the managerial talent literature, talents reflect a holistic picture of one that can succeed in both the short-term and long-term goals of a company. Here, the authors show that talented managers are inefficient in meeting short-term goal – working capital management. Thus, the authors add to the research by providing evidence that talented managers are myopic.

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“…For companies that reach this stage, reorganization is often the only way to avoid bankruptcy and maintain business development. In the event of bankruptcy, there is a big chance that the company will cease to exist (Cho, Okafor, Ujah & Zhang, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Bibliometric analysis of the literature on evaluation models of the bankruptcy risk

Grosu¹,

Chelba²,

Melega³

et al. 2023

Strategic Management

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Background: To manage an enterprise effectively, it is necessary to analyze and diagnose its financial condition, an activity that can warn management of dangerous business situations. Topics such as assessing financial position, performance, and risk, especially after situations that involve an economic and financial crisis in the company have been widely discussed in scientific literature. Purpose: The purpose of the research is to highlight the main research trends regarding bankruptcy risk assessment models. Study design/methodology/approach: The research strategy is based on two main directions: the first involves the selection of research papers with topics on Conan & Holder and Taffler models published on WoS between 2007 and 2021 and those published on SCOPUS between 2006 and 2021. The second direction aims to select the relevant papers and perform a content analysis of financial-accounting information of Conan & Holder and Taffler models. Findings/conclusions: The results obtained were concretized in the design of a bibliometric analysis of bankruptcy risk assessment models, which provides an overview of the new research trends regarding bankruptcy risk assessment models. Thus, it was found that most of the studies focus on the analysis of the efficiency of the bankruptcy risk assessment methods and the identification of new options that allow predictability of the risk. Limitations/future research: Our study limitations are mainly due to the bibliometric algorithm, in the sense that only papers indexed in WoS and Scopus can be imported, processed, and interpreted, which excludes parts of the existing literature on this topic and omits the analysis of some pertinent contributions to our research area. This research can be used as a cornerstone for new research directions, both quantitative and qualitative, on the mechanism of application of bankruptcy risk prevention methods.

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Executives’ gender-diversity, education, and firm’s bankruptcy risk: Evidence from China

Cited by 26 publications

References 63 publications

Gender diversity and corporate financial distress in the Pakistan stock market: the interacting effect of family-controlled companies

Gender diversity and corporate financial distress in the Pakistan stock market: the interacting effect of family-controlled companies

Working capital management and managerial talent

Bibliometric analysis of the literature on evaluation models of the bankruptcy risk

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