Board diversity and organizational valuation: unravelling the effects of ethnicity and gender

Board diversity on firm performance from resource-based view perspective: new evidence from Pakistan

Purpose

This study aims to investigate the impact of extensive board diversity on firm performance from the perspective of resource-based view (RBV) theory in the context of Pakistan.

Design/methodology/approach

The analyses are made using a panel random-effects model and generalized method of moment (GMM) across 188 non-financial firms listed in the Pakistan Stock Exchange (PSX) over the period of 2009–2020. The robustness of findings is checked through alternative measurements of the variables and alternative estimation techniques.

Findings

The results show that board members' nationality, ethnicity and educational level diversities are significantly positively related to firm performance. In contrast, age and educational background diversities negatively affect firm performance. However, gender and tenure diversities have an insignificant relationship with firm performance.

Research limitations/implications

This study is conducted in the context of Pakistani firms; thus, the findings may not be generalizable to other economies because different economies have different institutional settings and governance structures.

Practical implications

The policy-makers should encourage the inclusion of board members' nationality, ethnicity and educational level diversities having relevant educational backgrounds to improve firms' competitive performance. The suggested structure of the corporate board may improve firm performance by attracting multiple stakeholders and fulfilling their expectations.

Social implications

The appointment of a director should be based on merit rather than on political connections or personnel relationships to improve social welfare and avoid their negative impact on firm competitive performance.

Originality/value

To the best of the authors' knowledge, this is the first study that investigates the impact of board diversity on firm accounting-based performance and market-based performance in the emerging economy of Pakistan. This study uses RBV theory to provide a unique corporate governance structure based on board diversity, particularly in Pakistan.

Social Wellbeing, Board-Gender Diversity, and Financial Performance: Evidence From Chinese Fintech Companies

The main goal of this study is to investigate the relationship between female representation on board of directors and financial performance, using evidence from Chinese fintech companies, which are providing financial services using cutting-edge technologies. This research used fintech firms listed on the Shanghai and Shenzen Stock Exchange from 2010 to 2019 to test the research questions using regression analyses by SPSS v26. According to the data, the Blau index has a large and negative influence on Tobin's Q, which demonstrates that gender diversity harms the performance of Chinese enterprises. Furthermore, corporate social responsibility (CSR) is found to have a significant and positive moderating influence on Tobin's Q, implying that the adoption of CSR converts a negative to a positive effect. Diversified board members can improve the organization's control and monitoring operations, and female-represented board of directors can participate in the CSR activities that contribute to the organization's performance. The study contributes to the research of gender diversity by providing evidence that women on board of directors enhance firm performance, and the moderating function of CSR is examined with the link of female participation on the board of directors and financial performance.

The Effect of Intellectual Capital and Board Characteristics on Value Creation and Growth

The present study evaluates the relationship between intellectual capital and corporate board characteristics on value creation and growth. Different work experiences and education were two indexes of intellectual capital, and gender diversity was the only characteristic of board members. The study’s statistical population includes companies listed on the Tehran Stock Exchange during 2012–2018. Panel data regression models were employed to elucidate the relationship between research variables. The obtained results indicated that the intellectual capital of the board members of companies listed on the Tehran Stock Exchange does not affect companies’ value and growth. According to the results, appointing female managers should not be dependent on firm growth because gender diversity does not affect the value creation and growth of companies listed on the Tehran Stock Exchange.

Board Gender Diversity and Corporate Social Performance in Different Industry Groups: Evidence from China

This paper examines the heterogeneous links between board gender diversity and corporate social performance in different industries across China. OLS regression models are approximated using the data of Chinese industries from 2009 to 2015. Robustness test and two-stage least square (2SLS) methods are incorporated to cater for robustness and endogeneity. Board gender diversity (BGD) stimulates corporate social performance (CSP) of firms with environmental and social risk exposure regardless of critical mass and directors’ independence. It does so for firms with governance risk exposure while incorporating the critical mass effect and the director’s independence. Overall, the positive effect of BGD is prevalent in different industries at an aggregate level while considering firms with an overall ESG risk exposure. The findings imply that BGD can mitigate the ESG risk exposure in terms of enhancing the CSP and the advantage can be transpired with the inclusion of even one female director (independent or executive) to the board. The study also highlights that BGD enhances CSP in industries with more environmental and social risk exposure while doing so in industries with governance risk exposure after complementation by critical mass and independent director effects.

ESG (Environmental, Social and Governance) Performance and Board Gender Diversity: The Moderating Role of CEO Duality

According to the 2030 Agenda, gender equality plays a central role in achieving social development, expanding economic growth and improving business performance. From this perspective, many studies claim that a more balanced presence of women on Board of Directors (BoD) could have a positive impact on firms’ financial performance, but the effect of such diversity on sustainability performance is still underexplored. The purpose of this paper is to investigate how gender composition of BoD affects the corporate sustainability practices. In particular, we focused on the relationship between board gender composition and ESG (Environmental, Social and Governance) performance, by verifying if and to what extent there is a moderation effect due to the presence of CEO duality. We used the ESG index, provided by Bloomberg Data Service, as a proxy of sustainability performance and the Blau index as a measure of gender diversity in the BoD. The empirical analysis was carried out on a sample of Italian non-financial companies listed on Mercato Telematico Azionario (MTA) and includes a total of 128 observations. Results has shown that a greater gender diversity on BoD has an overall positive influence on ESG performance, while CEO duality negatively moderates the foregoing relationship.

Financial performance of hospitals: A critical obligation of corporate governance dimensions

BACKGROUND

This paper aims to investigate the effects of corporate governance mechanisms on the financial performance of hospitals. The statement, "good corporate governance" has been incorporated in the health care sector over the last decade, as an element to improve financial performance.

METHODS

The researchers relied on both primary and secondary data in the study. For the primary data, the authors used structured and nonstructured questionnaires to obtain data from 125 hospitals. The secondary data used emanated from board meetings, financial statements and relevant reports of the selected hospitals from 2010 to 2017. However, the data was then sorted out to get the required information on Chief Executive Officer (CEO) presence, board relationship, governance dynamics, gender diversity and financial performance.

RESULTS

On the basis of empirical evidence provided in this study, the results show that the Independent Directors (INDPDR) variable has a positive effect on Return on Assets and Net Profit Margin and also a high statistically significant value of 0.000 for both performance measures. This is an indication that the variable, INDPDR, is highly capable of improving hospital financial performance. From our studies, Board Size and CEO Duality exhibited a negative relationship with the financial performance measures.

CONCLUSIONS

Every hospital needs money to maintain a standard health facility and to sustain in operation. However, the inclusion of board of directors improves hospital financial management and enhances performance. Corporate governance mechanisms influence the behavior of health systems in ways that are associated with financial performance.

Board structure and corporate R&D intensity: evidence from Forbes global 2000

Purpose

This study aims to examine the impact of board structure on risk-taking measured by research and development (R&D) intensity in OECD countries.

Design/methodology/approach

The study uses a panel data of 200 companies on Forbes global 2000 over the 2010-2014 period. It uses the ordinary least square multiple regression analysis techniques to examine the hypotheses.

Findings

The results show that the frequency of board meetings and board size are significantly and negatively related to risk-taking measured by R&D intensity, with a greater significance among Anglo-American countries than among Continental European countries. The rationale for this is that the legal and accounting systems in the Anglo American countries have greater protection through greater emphasis on compliance and disclosure, and therefore, allowing for less risk-taking.

Research limitations/implications

Future research could investigate risk-taking using different arrangements, conducting face-to-face meetings with the firm’s directors and shareholders.

Practical implications

The results suggest that better-governed firms at the firm- or national-level have a high expectancy of less risk-taking. These results offer regulators a resilient incentive to pursue corporate governance (CG) and disclosure reforms officially and mutually with national-level governance. Thus, these results show the monitoring and legitimacy benefits of governance, resulting in less risk-taking. Finally, the findings offer investors the opportunity to build specific expectations about risk-taking behaviour in terms of R&D intensity in OECD countries.

Originality/value

This study extends and contributes to the extant CG literature, by offering new evidence on the effect of board structure on risk-taking. The findings will help policymakers in different countries in estimating the sufficiency of the available CG reforms to prevent management mishandle and disgrace.

Effect of board- and firm-level characteristics on the product responsibility ratings of firms from emerging markets

Purpose

Consumers have increasingly become more concerned about environmental degradation, wastage of critical resources and safety. Therefore, firms are adopting sustainability management practices to attract these conscious consumers. Product responsibility (PR) is an important indicator of corporate social responsibility (CSR) and sustainability management. This study examines the relationship between the board- and firm-level characteristics and the PR ratings of firms.

Design/methodology/approach

A temporal design with a lag of one year for a sample of 403 firms from the global emerging economies is analyzed for this purpose.

Findings

Hierarchical regression analysis shows that total revenue, board size, and board diversity have a positive effect on PR ratings.

Research limitations/implications

These findings have implications for policy-level decisions on the composition of boards for the sustainable future of firms.

Originality/value

The study is one of the few studies that have looked into the factors affecting the PR ratings, which are an important indicator of the sustainable practices of an organization.

Occupational gender segregation and economic growth in U.S. local labor markets, 1980 through 2010

The exchange of diverse ideas has been shown to be a major driver of economic growth and innovation in local labor markets across the U.S. Yet, persistently high levels of occupational gender segregation pose a barrier to such exchange between women and men workers. Consistent with this, organizational sociologists have identified multiple economic benefits to gender diversity in workplaces. Yet, it is unclear whether these trends apply to local labor markets, which constitute the ecological geographic environment for firms. In this study, I use fixed effects regression models to examine the relationship between labor market levels of segregation and economic growth from 1980 through 2010. I find that gender segregation hinders the expansion of finance and technology sectors as two industries that rely on the exchange of information and innovation. Consequently, higher levels of gender segregation are also a bane to economic productivity, as measured through hourly wages. Results from this study suggest that gender equity, manifested in lower levels of occupational segregation, is a vital ingredient in the economic development of local U.S. labor markets.

Gender diversity, ethnic diversity and employee performance in a South African higher education institution

Orientation: Although there has been an improvement in workforce diversity in South Africa, gender and ethnicity issues such as discrimination, prejudice and sexual harassment prevail within organisations. This is because organisational leaders view diversity as a matter of legal compliance instead of as a value addition to organisational growth and profitability. Based on this, it is important for organisations to understand the economic side of diversity and not just be content with having such a workforce.Research purpose: This study investigated the effects of gender and ethnic diversity on the performance of employees in a selected higher education institution in South Africa.Motivation of the study: The study was conducted to determine whether gender and ethnic diversity influences the performance of employees in a higher education institution in South Africa. It is believed that by doing so, the study may assist organisational leaders to determine strategies and best practices that will create culture that is inclusive rather than exclusive.Research approach/design and method: A cross-sectional research design was used. A stratified random sample (n = 258) was chosen by dividing employees into homogeneous strata of academic and non-academic employees. A self-administered questionnaire was used to gather data. Pearson product moment correlation and multiple regression analysis were performed.Main findings: The results show that gender diversity and ethnic diversity are positively and significantly related to employee performance. The study recommends that higher education institutions implement effective diversity management policies and strategies to improve the effectiveness of gender and ethnic diversity towards the performance of employees.Practical/managerial implications: The study recommends organisations to embrace diversity and not just abide by the affirmative action policies and be satisfied with having such a workforce. To achieve this, effective diversity management programmes such as diversity training and mentoring programmes should be implemented to ensure that all employees are properly trained on diversity issues.Contribution/value add: First of all, the findings of this study will add to existing knowledge that will aid in the understanding of gender and ethnic diversity in general and its relevance to employee performance, which in turn leads to organisational performance. Furthermore, this study will be an eye opener to organisational leaders and employees as it will help them to begin to see that diversity is a blessing rather than a matter of legal compliance. It will help organisations to see the need for having diversity and confirm that employees can work together despite their differences.

Contextualizing comprehensive board diversity and firm financial performance: Integrating market, management and shareholder’s perspective

The study investigates demographic diversity, cognitive diversity and internal diversity within Islam among top-level management of firms and their impacts on the financial performance of Malaysian-listed companies. In addition, Muslim and non-Muslim women and Islamic religious diversity on corporate boards are investigated. Even though numerous organisations desire to be socially diverse, the significance of diversity for organisational performance remains uncertain. Are profitable companies inclined to improve board diversity or do other characteristics of the company contribute to firm performance? Does the participation of Muslim and non-Muslim women on corporate boards affect firm performance? Does internal diversity within Islam affect firm performance? Data from 330 Malaysian-listed companies in eleven full fledged sectors were used for the period from 2009 to 2013. This study employed econometrics methodology from panel data analysis to fill the research gap in the current management literature. This study used the interaction approach to examine empirically diverse corporate boards and their impacts on firm performance. This discussion included: (1) a combination of gender diversity and ethnic diversity and (2) a combination of gender diversity and foreign participation. The findings suggest that demographic, cognitive and internal diversity within Islam are significant predictors of a firm’s financial performance. Ethnic women on boards have a significant and negative impact on firm performance. Hence, companies having high profits are more accountable for encouraging diversity among top-level management.

Board Gender Diversity in the STEM&F Sectors: The Critical Mass Required to Drive Firm Performance

This study investigates the link between board gender diversity (BGD) and firm performance (FP). The analysis is conducted using Fortune 500 firms in the Science, Technology, Engineering, Mathematics, and Finance (STEM&F) sectors covering a period of seven years, from 2007 to 2013. The theoretical framework combines several theories that give shape to the critical mass effect of BGD on FP. This shape shows that below the critical mass threshold, BGD may represent a disadvantage to the board as it may facilitate the formation of subgroups, dysfunctional conflicts, and distrust. However, at or above the critical mass threshold, BGD facilitates better monitoring of management, greater resource provisions, and divergent thinking. To ensure sound results, this study addresses endogeneity concerns regarding omitted variable bias, reverse causality, and dynamic endogeneity. These results support a significant U-shaped relationship between the number of female directors and FP in the STEM&F sectors. That is, BGD yields higher FP when there is a critical mass of women on the board. This finding remains robust when alternative proxies for BGD and FP are employed and is consistent with the predictions of our theoretical framework. Our analysis also reveals that the positive effect of BGD on FP increases when there is at least a critical mass of 30% of women on a corporate board. This finding suggests that boards that have reached a critical mass of 30% of women present a favorable environment to capitalize on innovative ideas arising from BGD.

Corporate governance and dividend pay-out policy in UK listed SMEs

Purpose

The purpose of this paper is to examine the extent to which corporate board characteristics influence the level of dividend pay-out ratio using a sample of UK small- and medium-sized enterprises from 2010 to 2013 listed on the Alternative Investment Market.

Design/methodology/approach

The data are analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions.

Findings

The results show that board size, the frequency of board meetings, board gender diversity and audit committee size have a significant relationship with the level of dividend pay-out. Audit committee size and board size have a positive association with the level of dividend pay-out, whilst the frequency of board meetings and board gender diversity have a significant negative relationship with the level of dividend pay-out. By contrast, the findings suggest that board independence and CEO role duality do not have any significant effect on the level of dividend pay-out.

Originality/value

This is one of the first attempts at examining the relationship between corporate governance and dividend policy in the UK’s Alternative Investment Market, with the analysis distinctively informed by agency theoretical insights drawn from the outcome and substitution hypotheses.

Gender diversity in the Italian boardroom and firm financial performance

Purpose

This study aims to analyse the relationship between board gender diversity and firm financial performance in Italy, where the recently enforced Law 120/2011 prescribes gender quotas for boards of directors.

Design/methodology/approach

Panel data analysis was used to examine the gender diversity–firm financial performance relationship in an unbalanced panel of 918 Italian listed companies during the years 2011-2014.

Findings

Gender diversity, as measured by the percentage of women on a board and by the Blau and the Shannon indices, has a positive and significant effect on Tobin’s Q, while the presence of one or more women on the board per se has an insignificant effect on firm financial performance.

Practical implications

The results suggest that board gender diversity is not a simple “numbers game”, greater gender diversity may generate economic gains, greater gender diversity does not destroy shareholder value, investors do not penalize companies that increase female representation on their boards and Italian companies should focus their efforts on the right mix of men and women rather than on simply the presence of at least one woman on a board of directors.

Originality/value

Most articles on this topic use data from countries with a legal system based on common law; this paper analyses Italy, a country with a civil law system. This is almost certainly the first study to examine the effect of board gender diversity on firm financial performance in the Italian market.