Women on Boards and Financial Performance: Evidence from a European Emerging Market

Abstract

This paper examines the association between gender diversity on corporate boards and firm performance for a European emerging market, which lags behind in terms of both corporate governance quality and social cohesion indicators. In a sample of Romanian companies listed on BSE (Bucharest Stock Exchange) during 2012-2016, this study confirms previous concerns related to the endogeneity of gender diversity variables in firm performance regression analysis and shows that, on average, diversity has no significant impact on firm-performance. However, based on a sub-sample analysis, results show a robust association in the case of profit-firms and those listed on the Standard tier. As losses can be construed as a distortion factor and Standard tier companies are the smallest and less well governed on the market, the results could be taken to suggest that Romanian listed companies do benefit from increasing gender diversity in the boardrooms, which could complement their rather poor corporate governance practices. Overall, the paper concludes that, in the context of an emerging market, policies aimed at increasing gender diversity in the boards appear to be financially viable and even beneficial for the major part of listed companies, balancing successfully the social cohesion and economic components of sustainable development.

Do the Quota Applications for Women on Boards Improve Financial Performance

“…Accordingly, no correlation between the percentage of women on boards and the financial performance criteria was determined. These results are consistent with some studies in the literature [12,16,18,20,45,57,58]. Brindelli et al [15] diversely showed that the relationship between women on boards and a bank's ESG performance is an inverted U-shape.…”

“…Sustainable social participation policies such as compulsory gender quotas on boards ensure financial sustainability and produce positive economic outputs for shareholders [20]. The original value and contribution of this study is its demonstration that women are being appointed to boards without being ready, just to fill compulsory or voluntary female member quotas.…”

“…In some studies, no significant correlation between two variables was found [16,43,44]. For example, Ionascu et al [20] examined the association between gender diversity on boards and firm performance for a European emerging market. They found that it has no significant impact on firm performance.…”

“…Policies aimed at increasing the gender diversity on boards appear to be beneficial, balancing successfully the social cohesion and economic components of sustainable development [20], given that equal opportunities to women for sustainable economic development have recently been reflected in the policies of governments. Besides, governments' regulatory policies regarding discrimination on boards are important for the sustainable improvement of financial performance.…”

Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis

“…For those reasons, there are many papers linking only one dimension of corporate governance practices and CFP. For example, Post & Byron [53] and Ionascu et al [54] focused on one dimension of good governance practices (i.e., board gender composition) on CFP. Based on firms' board independence, Rhoades et al [14] analyzed its influence on CFP.…”