Women on boards, firm risk and the profitability nexus: Does gender diversity moderate the risk and return relationship?

Nadeem, Muhammad; Suleman, Muhammad Tahir; Ahmed, Ammad

doi:10.1016/j.iref.2019.08.007

Cited by 97 publications

(126 citation statements)

References 52 publications

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“…BGD is considered to be a significant determinant of corporate policy-making (Adams & Ferreira, 2009;Levi, Li, & Zhang, 2014). Prior studies generally concur that female representation on boards is associated with higher financial performance and market valuation (Adams & Ferreira, 2009;Erhardt, Werbel, & Shrader, 2003;Nadeem, Suleman, & Ahmed, 2019), innovation in products and services 1 (Torchia, Calabrò, & Huse, 2011), less empire building through acquisitions (Chen, Crossland, & Huang, 2016;Levi et al, 2014), better CSR ratings (Bear, Rahman, & Post, 2010;Nadeem, Zaman, & Saleem, 2017), and lower corporate social irresponsibility (Jain & Zaman, 2019).…”

Section: Board Gender Diversitymentioning

confidence: 99%

Are women eco‐friendly? Board gender diversity and environmental innovation

et al. 2020

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As a result of recent climate change impacts, environmental sustainability has received enormous attention from scholars and policy makers. Environmental innovation is one of the major ways of acting in harmony with the environment, but it also requires a significant amount of resources and strong corporate commitment. As boards of directors have great influence over the strategic direction of firms and are responsible for corporate environmentalism, we examine the likely relationship between board gender diversity (BGD) and environmental innovation measured as process innovation and product innovation. Based on a relatively large dataset (10,334 firm-year observations) of U.S. listed firms, we find that BGD has a significant positive association with environmental innovation. Furthermore, we also find that this relationship is more pronounced in less profitable firms and in environmentally sensitive industries. Our results remain robust to endogeneity issues and alternative proxies. We interpret our results under upper echelon and gender socialization theories and suggest important implications for policy makers.

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Section: Board Gender Diversitymentioning

confidence: 99%

Are women eco‐friendly? Board gender diversity and environmental innovation

et al. 2020

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“…Female representation on corporate boards is considered to be a significant determinant of corporate policymaking (Adams & Ferreira, 2009;Levi, Li, & Zhang, 2014;Mohan, 2014). The empirical evidence suggests that women on boards are associated with higher financial performance and market valuation (Adams & Ferreira, 2009;Erhardt, Werbel, & Shrader, 2003;Liu et al, 2014;Nadeem, Suleman, & Ahmed, 2019); firm innovation (Torchia, Calabrò, & Huse, 2011); less empire-building through acquisitions (Chen, Crossland, & Huang, 2016;Levi et al, 2014); better audit outcomes (Cameran, Ditillo, & Pettinicchio, 2018;Hardies, Breesch, & Branson, 2016); and better corporate social responsibility ratings (Bear, Rahman, & Post, 2010;Nadeem, Zaman, & Saleem, 2017;Post, Rahman, & Rubow, 2011). Other experimental studies suggest that, relative to men, women are risk averse with known probabilities (Fehr-Duda, De Gennaro, & Schubert, 2006) and investment decisions (Bernasek & Shwiff, 2001), although these studies are largely based on gender differences in the general population.…”

Section: Boardroom Gender Diversitymentioning

confidence: 99%

“…First, a major corporate governance issue currently facing organizations is the requirement to increase female representation on boards. In response, several studies (Adams & Ferreira, ; Campbell & Mínguez‐Vera, ; Gyapong, Ahmed, Ntim, & Nadeem, ; Gyapong et al, ; Liu et al, ; Nadeem, Suleman, & Ahmed, ; Xu, Li, Li, & Liu, ) have investigated the firm value implications of women on boards. Nevertheless, these studies mainly focus on financial returns and ignore the needs of other stakeholders that may be interested in value creation other than financial returns.…”

Section: Introductionmentioning

confidence: 99%

Board gender diversity and environmental, social, and economic value creation: Does family ownership matter?

2019

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Prior literature on firm value creation for stakeholders has oversimplified and narrowed the concept of value down to “economic returns.” Although economic returns are fundamental to a firm's core stakeholders (i.e., shareholders), other legitimate stakeholders want “value” beyond economic returns. We define stakeholder value as the financial and nonfinancial returns a firm can offer to its legitimate stakeholders, and empirically investigate whether board gender diversity (BGD) improves our multidimensional measure of value. Using Thomson Reuters' ASSET4 data for U.K.‐listed firms available from Eikon for the period 2007–2017, we report a significant positive relationship between BGD and stakeholder value creation. In particular, BGD increases social and environmental value creation in addition to economic returns. Furthermore, our results suggest that even though gender‐diverse boards are associated with stakeholder value creation in family firms, this is only conspicuous for environmental value creation. The findings suggest that although female directors cater to the interests of broader stakeholder groups, family ownership causes them to mainly focus on environmental stakeholders. The study provides important implications for regulators, stakeholders, and academic scholars.

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“…Although a plethora of existing studies increase our understanding on the business implications of BGD by examining its impacts on firm performance (Adams & Ferreira, 2009;Ararat, Aksu, & Cetin, 2015;Liu, Wei, & Xie, 2014;Nadeem, Suleman, & Ahmed, 2019), information asymmetry (Abad, Lucas-Pérez, Minguez-Vera, & Yagüe, 2017;Gul, Srinidhi, & Ng, 2011), executive/top management compensation (Lucas-Pérez, Mínguez-Vera, Baixauli-Soler, Martín-Ugedo, & Sánchez-Marín, 2015;Perryman, Fernando, & Tripathy, 2016), and corporate social responsibility (Bear, Rahman, & Post, 2010), the relationship between BGD and intellectual capital (IC hereafter) disclosure in IPO prospectuses remains an unopened black box. Prior studies argue that nonfinancial information, particularly IC, in IPO prospectuses may result in lower cost of capital (Garanina & Dumay, 2017), increased market capitalization (Bismuth & Tojo, 2008), higher post-IPO stock returns and reduced information asymmetry (Atkins & Maroun, 2015).…”

mentioning

confidence: 99%

Does board gender diversity influence voluntary disclosure of intellectual capital in initial public offering prospectuses? Evidence from China

Nadeem

2019

Corporate Governance

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Research question/issue Using a multitheoretic view of boards, this study examines the impact of boardroom gender diversity (BGD) on voluntary intellectual capital (IC) disclosure in initial public offering (IPO) prospectuses in China—the world's second‐biggest economy, which is moving from a planned economy to a market‐oriented one. Furthermore, this study also investigates the impact of family ownership on the relationship between BGD and IC disclosure in the Chinese environment, which is characterized by less‐developed corporate governance mechanisms. Research findings/insights Based on a comprehensive content analysis of Chinese IPO prospectuses between 2009 and 2017 and measuring disclosure index at 78 dimensions under six broad categories of IC, the empirical results document (a) a significant positive relation between BGD and IC disclosure—in line with resource dependence theory, (b) a significant negative impact of female independent directors on IC disclosure—opposite to agency theory predictions, and that (c) the BGD–IC disclosure relationship is generally stronger for firms with two or more women on boards—in line with critical mass theory in China. Finally, this study also reveals that family ownership has adverse impacts on the BGD–IC disclosure relationship. These results are robust to a battery of sensitivity analyses. Practitioner/policy implications This study provides positive capital market implications of BGD through enhanced IC disclosure in IPO prospectuses. In doing so, the study has important implications for regulators and top management teams in devising policies concerning female representation on boards and voluntary disclosure of IC to inform the market participants of the true value of the company.

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Women on boards, firm risk and the profitability nexus: Does gender diversity moderate the risk and return relationship?

Cited by 97 publications

References 52 publications

Are women eco‐friendly? Board gender diversity and environmental innovation

Are women eco‐friendly? Board gender diversity and environmental innovation

Board gender diversity and environmental, social, and economic value creation: Does family ownership matter?

Does board gender diversity influence voluntary disclosure of intellectual capital in initial public offering prospectuses? Evidence from China

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