Relationship between Women on Board Directors and Economic Value Added: Evidence from Latin American Companies

Abstract

This study aims to evaluate the relationship between the presence of women on boards of directors and the generation of economic value added (EVA®). For the empirical analysis, a panel data model with random effects is used, encompassing 202 Latin American companies between 2019 and 2021. The results obtained show that having women on boards of directors has a non-significant positive effect on EVA®, which diminishes as women’s participation on the board increases. Theory suggests that more diverse boards of directors exercise better control, leading to improved financial results. However, the diversity of members has also been associated with longer decision-making processes that generate inefficiencies and increase costs. This contribution adds to the existing literature by exploring under-studied variables in the region and expanding knowledge on this topic in the Latin American context.

Sustainable Practices and Financial Performance in Latin America: An Analysis of Environmental Scores

“…Dependent variable: In this study, the variable of interest was Return on Assets (ROA), which is a financial ratio that indicates how profitable a firm is concerning its total assets (Adams & Ferreira, 2009;Carter et al, 2003). It can be used by managers, analysts, and investors to determine whether a firm uses its assets efficiently to generate profit (Arango-Home et al, 2023). Although other variables could have been chosen, this study is in line with others that have used ROA to evaluate the impact of ESG factors on financial performance, such as those conducted by Marquez-Cardenas et al…”