Women on boardroom: Does it create risk?

Fauzi, Fitriya; Basyith, Abdul; Ho, Poh-Ling

doi:10.1080/23322039.2017.1325117

Cited by 17 publications

(19 citation statements)

References 48 publications

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“…Results in Table 3 show that lagged equity volatility significantly explains the variation in current volatility (β = 0.007, p < .05) when the dynamic OLS technique is used; however, the potential endogeneity issue is mitigated through system GMM technique as 1-year lagged volatility coefficient is found to be insignificant (β = 0.002, p > .1). It is also evaluated that gender diversity 1 is significantly and negatively associated with equity volatility (β = −0.039, p < .05), which is supported by many prior studies (Fauzi et al, 2017; Jizi & Nehme, 2017; Lenard et al, 2014). We believe that despite a lower level of representation, South Asian women on the board can improve the quality of the board's decisions (Singh & Vinnicombe, 2004), restrict managerial opportunism (Sabatier, 2015), take neutral and independent decisions to balance the interests of multiple shareholders (Liao et al, 2015;Lückerath-Rovers, 2013), and thereby, restrict excessive risk taking in a firm.…”

Section: Hypothesis Testingsupporting

confidence: 70%

“…Results in Table 3 show that lagged equity volatility significantly explains the variation in current volatility (β = 0.007, p < .05) when the dynamic OLS technique is used; however, the potential endogeneity issue is mitigated through system GMM technique as 1-year lagged volatility coefficient is found to be insignificant (β = 0.002, p > .1). It is also evaluated that gender diversity 1 is significantly and negatively associated with equity volatility (β = −0.039, p < .05), which is supported by many prior studies (Fauzi et al, 2017; Note. VIF = variance inflation factor; GND = board gender diversity; PPS = pay-performance sensitivity; IAC = institutional activism; CSR = corporate social responsibility; BDZ = board size; BDI = board independence; FRZ = firm size; ROA = return on assets.…”

Section: Hypothesis Testingsupporting

confidence: 69%

“…Using the generalized method of moments (GMM) and the one-step Arellano and Bond technique, the authors revealed that gender diversity reduces the firm's equity volatility, especially in utilities, health care, consumer services, and consumer goods industry. In the same lines, Fauzi et al (2017) also found women on the board a firm's risk by using 30 Indonesian firms in their analysis. They also postulated that younger female CEOs with business degrees and overseas qualified are more likely to reduce the firm's stock volatility.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 82%

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Restrictive and Supportive Mechanisms for Female Directors’ Risk-Averse Behavior: Evidence From South Asian Health Care Industry

et al. 2020

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This article aims to understand the impact of gender diversity on a firm’s equity volatility along with the moderating effect of chief executive officer (CEO) pay–performance sensitivity, institutional activism, and corporate social responsibility (CSR) activities. The sample consists of 200 South Asian health care firms over the period 2010 to 2018. After confirming the prevalence of endogeneity, we rely on the results of system generalized method of moments (GMM) rather than any static model. The results show that a higher representation of women on the board can mitigate the firm’s equity volatility. The findings of the study also purport that CEOs with higher pay–performance sensitivity exploit female directors to take the excessive risk, whereas institutional investors support the risk-averse behavior of these directors. However, we find no statistical evidence that CSR activities moderate the relationship between gender diversity and firm’s equity volatility. Our results theoretically support both stakeholder and agency perspectives that South Asian capital markets should enhance the representation of women on board to mitigate agency conflicts and to improve long-term firm’s sustainability.

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Section: Hypothesis Testingsupporting

confidence: 70%

“…Results in Table 3 show that lagged equity volatility significantly explains the variation in current volatility (β = 0.007, p < .05) when the dynamic OLS technique is used; however, the potential endogeneity issue is mitigated through system GMM technique as 1-year lagged volatility coefficient is found to be insignificant (β = 0.002, p > .1). It is also evaluated that gender diversity 1 is significantly and negatively associated with equity volatility (β = −0.039, p < .05), which is supported by many prior studies (Fauzi et al, 2017; Note. VIF = variance inflation factor; GND = board gender diversity; PPS = pay-performance sensitivity; IAC = institutional activism; CSR = corporate social responsibility; BDZ = board size; BDI = board independence; FRZ = firm size; ROA = return on assets.…”

Section: Hypothesis Testingsupporting

confidence: 69%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 82%

See 1 more Smart Citation

Restrictive and Supportive Mechanisms for Female Directors’ Risk-Averse Behavior: Evidence From South Asian Health Care Industry

et al. 2020

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“…In addition, female executives often experience a shorter tenure compared to their male peers (Gayle et al, 2012;Glass and Cook, 2016). This situation might allow them to have more propensity to reduce a firm's risk, as they are believed to be more conservative when dealing with financial issues (Faccio et al, 2016;Huang and Kisgen, 2013;Fauzi et al, 2017). In addition, short-tenured female executives are more likely to avoid long-term investment and this behavior supports the notion of Bebchuk and Stole (1993), Bushee (1998) and Koh (2007), who documented that female executives have a greater incentive to hold excess cash for short-term investments and to anticipate any potential risks in the future (Vieru, 2015;Zeng and Wang, 2015;Adhikari, 2018;La Rocca et al, 2019).…”

Section: Discussionmentioning

confidence: 99%

Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country

Suherman

Usman

Mahfirah

et al. 2021

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Purpose This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing Southeast Asian capital market (Indonesia). Design/methodology/approach The sample was screened from 231 publicly listed companies in the Indonesian Stock Exchange. The period of observation was 2011–2017. Two measures were applied for corporate cash holdings: the ratio of cash and cash equivalent to total assets and cash and cash equivalent to net assets. Three surrogate indicators were used for female executives: female CEO, the proportion of female members in the board of management and the number of female members in the board of management. CEO tenure is the length of time a CEO has been a member of the board of management. This study uses panel data regression analysis, including the fixed effect model with clustered standard errors. Findings The empirical evidence indicates that female executives and CEO tenure are positively and negatively associated with corporate cash holdings, respectively, and both are significantly related. Additional analysis using lagged independent variables remains consistent with the main analysis, suggesting that corporate cash holding becomes higher as a female presence in the board of management increases. Research limitations/implications Empirical tests set in Indonesia suggest that female executives are more conservative and risk-averse, thereby holding more cash with a precautionary motive. The findings also imply that CEOs with long tenure focus on long-term performance such as increasing research and development investments or capital expenditure, thus holding less cash. Accordingly, policymakers and regulators should promote diversity issues proportionally and advance to the board level. Originality/value This study contributes to the field of executive and CEO studies by enriching the empirical findings in related topics. In addition, to the best of the authors’ knowledge, this is one of the first studies applying two measures of cash holdings in the setting of a developing Southeast Asian capital market (Indonesia).

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“…A study based on quarterly data relating to 30 publicly listed Indonesian firms for the period 2009-2015 found that women CEOs had managed to lower the company's risk. Further, the number of women directors and the presence of a woman CFO had a considerable influence on the risk of the firms (Fauzi, Basyith, & Ho, 2017).…”

Section: Women Directorshipmentioning

confidence: 99%

Do Women Directors Impact the Risk and Return of Indian Banks?

Shukla

Narayanasamy

Singh

et al. 2020

IIM Kozhikode Society & Management Review

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The purpose of the paper is to investigate whether women directors impact the risk and return of Indian banks. This study employs panel data models for a sample of 29 Indian banks that form part of the National Stock Exchange 500 index for the period 2009–2016. This paper concludes that women directors influence the accounting returns (measured through Return on Assets) of Indian banks. However, it was found that women directors did not affect the risks (measured through Equity Beta and gross NPA to Total Assets) of the sample banks. This paper contributes to the literature and practitioners in several ways. To the best of the knowledge of the authors, no study has examined the impact of women directors on the risk and return of banks operating in India. Hence, the findings of this article have substantial implications both to academia and practitioners.

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Women on boardroom: Does it create risk?

Cited by 17 publications

References 48 publications

Restrictive and Supportive Mechanisms for Female Directors’ Risk-Averse Behavior: Evidence From South Asian Health Care Industry

Restrictive and Supportive Mechanisms for Female Directors’ Risk-Averse Behavior: Evidence From South Asian Health Care Industry

Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country

Do Women Directors Impact the Risk and Return of Indian Banks?

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