The impact of board-level female directors on firm performance: evidence from India

Abstract

PurposeThis study investigates the impact of female directors on firms' financial performance by scrutinizing the different roles they are empowered to fulfill.Design/methodology/approachThis study examines the impact of the roles performed by female directors on firms' financial performance using a panel dataset of the top 100 listed Indian firms over a period of 5 years. The study uses an appropriate panel data model for empirical analysis. For the robustness evaluation, a two-stage least square (2SLS) with the instrumental variable model were used.FindingsThe findings reveal a significantly positive impact of the total percentage of female directors on firms' financial performance. Further, by disentangling the impact of the total percentage of female directors between independent directors and executive directors, the study shows that independent female directors make a significant positive contribution to their firms' financial performance. By contrast, the performance impact of female executive directors was insignificant. In addition, the findings reveal that firms with a higher proportion of independent female directors outperform firms with a higher percentage of female executive directors.Originality/valueThis study is the first of its kind to unravel the performance impact of female directors and distinguish between the roles of independent directors and executive directors in the context of the emerging market of India, after the imposition of a gender quota for corporate boards.

Board gender diversity and bank performance in Jordan

“…By reporting the correlation matrix for the explained and explanatory variables, Table 3 confirms that the studied variables included in the model are proper, as they are not highly correlated. Consequently, the issue of multicollinearity did not pose a significant worry in the examination of correlations since none of the explanatory variables had coefficients above the threshold of 0.700 (Mansour et al, 2024;Saha et al, 2023). The correlation coefficient in Table 3 highlights the interplay between the market performance of the banking sector, board gender diversity, and relevant control variables.…”

“…This study builds upon recent studies(Arora & Soni, 2023;Gharbi & Othmani, 2023;Marei, 2023) by relying on Tobin's Q as a market-based metric(Mansour et al, 2022b;Saha et al, 2023). It is calculated by adding the market value of stocks to the book value of debt and dividing it by the book value of total assets.…”

Women Directors: An Empirical Test of Critical Mass Hypothesis

“…It is the later class of non-executivesaccording to Harjoto et al (2018) that incite board watchfulness for corporate common good. Saha (2023) posits that the presence of INEDs mitigates agency dilemma because they are primarily responsible for executive monitoring and control. Liao et al (2015) reported that the presence of independent non-executive directors engenders attainment of financial and non-financial stability as well as reduced conflicts in stakeholders' expectations.…”

“…It is important to note that empirical evidence from the Nigerian corporate environment would offer watertight validation for gender diversity in view of the 2022 Gender Gap Assessment report issued by the International Finance Corporation (IFC), which showed that women constituted 20 per cent of executive teams in Nigeriahigher than the global average (see Casanova et al, 2022). Secondly, the paper is inspired by the need to de-emphasise research linking board gender diversity to overall corporate performancewhich most often presents ambiguous outcomes (Chatterjee & Nag, 2023;Saha, 2023;Simionescu et al, 2021;Nielsen & Huse, 2010). The paper offers a role-based approach with emphasis on how gender disparity among directors affects the effectiveness of boards' role in facilitating achievement of specific corporate common good such as foreign capital importation.…”

Pengaruh Diversitas Gender Dewan terhadap Kinerja Perusahaan (Studi Global pada berbagai Negara di Dunia)

“…Selain itu, hasil ini juga menunjukkan bahwa direktur eksekutif perempuan dalam konteks India tidak mampu menyelesaikan masalah keagenan horizontal antara pemegang saham mayoritas dan minoritas karena mereka umumnya mewakili kelompok sebelumnya. Dengan demikian, dapat disimpulkan bahwa direktur perempuan independen secara khusus berkontribusi pada dampak keseluruhan kuota gender dewan terhadap kinerja perusahaan Saha, 2023).…”