The moderating role of board gender diversity in association of board characteristics and firm value

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The present study investigates the relationship between board characteristics and a firm value. The study offers new insight into the association between board characteristics and a firm value by examining whether board gender diversity alters the impact of board characteristics on a firm value. The study uses panel data approach on a sample of 39 non-financial firms listed in the S&P BSE SENSEX 50 over 6 years (2014–2015 to 2019–2020). An appropriate model between fixed effect and the random effect was selected using the Hausman test first and two separate regressions were run later, showing the direct effect of board characteristics on firm value, and change in the effect of board characteristics on firm value when board gender diversity was put as a moderator. Consistent with the previous findings (Field, Lowry, & Mkrtchyan, 2013; Vo & Bui, 2017; Gulzar, Haque, & Khan, 2020), the study reveals that board busyness has a significant and positive effect on Tobin’s Q only, whereas, board meetings and board gender diversity are the factors that leave a significant negative effect on both return on assets (ROA) and Tobin’s Q. In contrast to existing literature (Chin, Ganesan, Pitchay, Haron, & Hendayani, 2019), we found that the board gender diversity positively moderates the association of board size and board meetings with Tobin’s Q and ROA, respectively.

Keywords: Corporate Governance, Companies Act, Financial Performance, Board Gender Diversity, Moderating Effect, Tobin’s Q

Authors’ individual contribution: Conceptualization — M.A. and M.T.J.; Methodology — M.A. and S.N.A.; Software — M.A.; Validation — M.M.A.; Formal Analysis — M.A. and M.M.A.; Investigation — M.A.; Resources — M.A. and M.F.A.; Writing — Original Draft — M.A.; Writing — Review & Editing — M.T.J. and S.N.A.; Supervision — M.F.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C33, G38, G300, K29, L1, L250, M140

Received: 04.01.2022
Accepted: 06.06.2022
Published online: 09.06.2022

How to cite this paper: Anas, M., Jamal, M. T., Ahmad, M. M., Azmi, S. N., & Alam, M. F. (2022). The moderating role of board gender diversity in association of board characteristics and firm value. Corporate Governance and Sustainability Review, 6(2), 29–41. https://doi.org/10.22495/cgsrv6i2p3