Gender diversity and financial performance in an emerging economy: empirical evidencefrom India

Abstract

Purpose This paper aims to examine the impact of gender diversity both at operational and leadership levels on the financial performance of firms in India. Design/methodology/approach The study is based on a panel data set of 100 large Indian corporate firms. This study uses the Blau index and Shannon index to compute gender diversity. First, this paper uses system generalized method of moments model to deal with the potential endogeneity issue in the association between gender diversity and firm performance. Second, to unveil heterogeneity in such a relationship, the study applies panel data quantile regression model. Finally, the study adopts a generalized estimating equation model to investigate such relationships for group affiliated and standalone firms. Findings This study finds a significant positive impact of workforce gender diversity and board gender diversity on the financial performance of firms. Further, the results of the quantile regression model indicate that the impact of gender diversity (workforce and board) on firm performance is more pronounced at higher quantiles of the conditional distribution of firm performance. However, the study fails to extricate any significant impact of audit committee gender diversity on firm performance. Finally, the study also finds a significant positive impact of gender diversity at both workforce and board level for a group affiliated, as well as standalone firms. Originality/value The present study makes a novel contribution to the extant literature on the association between gender diversity and financial performance of firms by examining such diversity at both operational and leadership levels in the context of an emerging country such as India that captures the complex realities pertaining to gender issues. Further, the study contributes to the empirical literature regarding the heterogeneous impact of gender diversity on firm performance in the Indian context.

Board human capital diversity and firm performance: evidence from top listed Indian firms

“…The result indicates that though the direction of the impact of BQD and BGD on ROA remains the same as in case of market-based measure, but the level of significance becomes marginal. Thus, it is of no surprise that extant literature is largely using market-based measure of FP to measure the impact of board’s human capital or quality of governance (Kagzi and Guha, 2018; Nguyen et al , 2017; Maji and Saha, 2021; Saha and Kabra, 2021). In addition, market-based measure is a comprehensive concept that is concerned with the expected value of future cash flows, thus accounting profit also gets captured in it.…”

“…Thus, it would be desirable for the future researchers to extend the current study by including additional proxies for the human capital diversity such as their prior work experience or other observable skills. Secondly, differences could exist between the performance impact of board's human capital diversity between business group affiliated firms and standalone firms as there are several perks associated with business group affiliation that is generally beyond the reach of standalone firms (Maji and Saha, 2021). Hence, given the dominance of business Board human capital diversity group affiliated firms in India, differences in the performance impact of board's human capital diversity between business group affiliated firms and standalone firms deserves further investigation.…”

“…We consider firms’ financial performance (FP) as the response variable and it is captured by using both market- and accounting-based measures. In particular, two proxies of FP are used such as: market capitalization (LnMC) as investors’ expectation about the future prospect of firm gets reflected in their market performance, given its competitive advantage and talent of corporate management (Wolfe and Sauaia, 2014) – moreover, it is widely used in the recent literature to measure FP (Maji and Saha, 2021; Saha and Kabra, 2021); and return on assets (ROA) as the accounting measure of FP is used (Arora and Sharma, 2016).…”

Climate change financial disclosure and firm performance: empirical evidence from Indian energy sector based on TCFD recommendations

“…Firm performance is the dependent variables of the study. Extant literature indicates that the researchers have used both accounting based (ROA and ROE) and market-based (market capitalisation and market to book ratio) measures of firm performance (Clarke et al , 2011; Eleftheriadis and Anagnostopoulou, 2014; Maji and Goswami, 2020; Maji and Saha, 2021). Following the empirical literature, we use two measures of firm performance: ROA defined as the ratio between net profit and total assets and natural log of market capitalization (LnMC) (Maji and Saha, 2021; Maji and Hussain, 2021).…”

Does gender diversity moderate the relationship between CSR committees and Sustainable Development Goals disclosure? Evidence from Latin American companies

“…For measuring gender diversity, we use the Blau index. The maximum value of the Blau index indicates that members from both gender categories have the same proportion (Maji & Saha, 2021). To compute the Blau index, we used the following equation:…”