SDMIMD Journal of Management

Open Access Open Access  Restricted Access Subscription or Fee Access

Women on Board and its Impact on Performance of NIFTY50 Firms


Affiliations
1 Associate Professor, Mumbai School of Economics and Public Policy, University of Mumbai, Mumbai – 400098, Maharashtra,, India
 

This research paper examines the relationship between women representation on Board of Directors and the financial performance of the NSE-NIFTY50 listed firms. The return on assets and assets turnover ratio is used as measure of firm’s performance; using panel regression for a period of 2014-15 to 2018-19, the impact of specific board characteristics including diversity index is assessed. It is observed that the productivity of these firms is clearly affected by the gender diversity. The profitability ratio is not seeing any significant impact. Though there is an overall increasing trend in the representation of women on board in sample firms, just a small proportion of women may not serve the true purpose in affecting the strategic decision making. Therefore,it is suggested that the representation should be more than the mandated number, to see its true impact on firm performance in the long run.

Keywords

Board Characteristics, Board of Directors, Financial Performance, India, NIFTY50, Women Directors
User
Notifications

  • Abad, D., Lucas-Perez, M. E., Minguez-Vera, A. and Yague, J., (2017). Does gender diversity on corporate boards reduce information asymmetry in equity markets? BRQ Business Research Quarterly. 20(3):192–205. https:// doi.org/10.1016/j.brq.2017.04.001

  • Abdullah, S. N. and Ku Ismail, K. N. I. (2013). Gender, ethnic and age diversity of the boards of large Malaysian firms and performance. Jurnal Pengurusan. 38:27–40. https://doi.org/10.17576/pengurusan-2013-38-03

  • Adams, R. B. and Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics. 94(2):291–309. https:// doi.org/10.1016/j.jfineco.2008.10.007

  • Arora, A. and Sharma, C. (2016). Corporate governance and firm performance in developing countries: Evidence from India. Corporate Governance. 16(2):420–36. https://doi.org/10.1108/CG-01-2016-0018

  • Awasthi, S. (2018). What prevents companies from appointing more women directors? Accessed at https:// indianexpress.com/article/gender/genderand-business -what-prevents-companies-from-appointing-morewomen-directors-5018769/ in April 2019

  • Brahma, S, Nwafor, C, Boateng. (2021). Board gender diversity and firm performance: The UK evidence. Int J Fin Econ. 26:5704–19. https://doi.org/10.1002/ijfe.2089

  • Business Today Newspaper. (2018). https://www. businesstoday.in/latest/corporate/story/posts-ofchairman-ceo-posts-to-be-separated-as-sebi-accepts-most-of-kotak-panel-proposals-246689-2018-03-28; Business today, March 28th 2018

  • Carter, D. A., D’Souza, F., Simkins, B. J. and Simpson, W. G. (2008). The diversity of corporate board committees and financial performance. http://papers.ssrn.com/ sol3/ papers.cfm?abstract_id_1106698 https://doi. org/10.2139/ssrn.1106698

  • Christiansen, L., Lin, H., Pereira, J., Topalova, P., and Turk R. (2016). Gender diversity in senior positions and firm performance: Evidence from Europe. IMF Working Paper. 50. https://doi.org/10.2139/ssrn.2759759

  • Ciavarella, A. (2017). Board diversity and firm performance across Europe. CONSOB Working Papers No. 85. https://doi.org/10.2139/ssrn.3084114

  • Dalci I. (2018). Impact of financial leverage on profitability of listed manufacturing firms in China. Pacific Accounting Review. 30(4):410–32. https://doi.org/10.1108/PAR- 01-2018-0008

  • Darmadi, S. (2013). Do women in top management affect firm performance? Evidence from Indonesia. Corporate Governance: The International Journal of Business in Society. 13(3):288–304. https://doi.org/10.1108/ CG-12-2010-0096

  • Deloitte Global Report. Women in Board room: A global Perspective. 6th edition, October, 2019 Deloitte Global, accessed at www.deloitte.com

  • Ekadah, J. W. and Kiweu, J. M. (2012). Effect of board gender diversity on the performance of commercial banks in Kenya. European Scientific Journal, April edition. 8(7):128–48.

  • Erhardt, N. L., Werbel, J. D. and Shrader, C. B. (2003). Board of director diversity and firm financial performance. Corporate Governance: An international review. 11(2):102–11. https://doi.org/10.1111/1467-8683.00011

  • Gallego-Alvarez, I., García-Sánchez, I. M. and RodríguezDominguez, L. (2010). The influence of gender diversity on corporate performance: La influencia de la diversidad de género en el rendimiento empresarial. Revista de Contabilidad-Spanish Accounting Review. 13(1):53– 88. https://doi.org/10.1016/S1138-4891(10)70012-1

  • Gómez, J. I. M., Cortés, D. L. and Betancourt, G. G. (2017). Effect of the board of directors on firm performance. International Journal of Economic Research. 4.

  • Gordini, N. and Rancati, E. (2017). Gender diversity in the Italian boardroom and firm financial performance. Management Research Review. 40(1):75–94. https:// doi.org/10.1108/MRR-02-2016-0039

  • Kamath, B. (2019). Impact of corporate governance characteristics on intellectual capital performance of firms in India. International Journal of Disclosure and Governance. 16(1):20–36. https://doi.org/10.1057/ s41310-019-00054-0

  • Kilic, M. and Kuzey, C. (2016). The effect of board gender diversity on firm performance: evidence from Turkey. Gender in Management: An International Journal. 31(7):434–55. https://doi.org/10.1108/GM-10-2015- 0088

  • Low, D. C., Roberts, H. and Whiting, R. H. (2015). Board gender diversity and firm performance: Empirical evidence from Hong Kong, South Korea, Malaysia and Singapore. Pacific-Basin Finance Journal. 35:381–401. https://doi.org/10.1016/j.pacfin.2015.02.008

  • Marinova, J., Plantenga, J. and Remery, C. (2016). Gender diversity and firm performance: Evidence from Dutch and Danish boardrooms. The International Journal of Human Resource Management. 27(15):1777–90. https://doi.org/10.1080/09585192.2015.1079229

  • Mehmet Nihat Solakoglu, Nazmi Demir. (2016). The role of firm characteristics on the relationship between gender diversity and firm performance. Management Decision, 54(6):1407-1419.

  • Mirza, H. H., Andleeb, S. and Ramzan, F. (2012). Gender diversity and firm performance: Evidence from Pakistan. Journal of Social and Development Sciences. 3(5):161–6. https://doi.org/10.22610/jsds.v3i5.698

  • Murthy, A. (2014). A critical analysis of the need for women directors in Indian Companies. In May 2019. http:// www.legalservicesindia.com/article/1774/The-needfor-women-directors-in-Indian-companies.html.

  • NSE official Website: www.nseindia.com, https://www1. nseindia.com/products/content/equities/indices/ nifty_50.htm

  • Prasad, R. (2019). Not enough women on board for a success story. in January 2020. https:// economictimes.indiatimes.com/news/company/ corporate-trends/not-enough-women-on-board-fora-success-story/articleshow/69604330.cms?utm_ source=contentofinterest&utm_medium=text&utm_ campaign=cppst

  • Prime Database. (2017). Corporate India: Women on Boards. PRIME Database Group.

  • Rao, D. S. (2020). Women on boards: India Inc lags in gender parity. January 2021. https://www.thefinapolis. com/exclusive-news/women-on-boards-india-inclags-in-real-gender-parity/artmid/1134/articleid/5462/ categoryid/83#:~:text=Overall%2C%20the%20 number%20of%20women,women%20on%20 boards%20is%201.03.

  • Rashid, A. (2010). CEO duality and firm performance: Evidence from a developing country. Corporate Ownership and Control. 8(1):163–75. https://doi. org/10.22495/cocv8i1c1p1

  • Reguera-Alvarado, N., De Fuentes, P. and Laffarga, J. (2017). Does board gender diversity influence financial performance? Evidence from Spain. Journal of Business Ethics. 141(2):337–50. https://doi.org/10.1007/s10551- 015-2735-9

  • Reddy, S., and Jadhav, A. M. (2019). Gender diversity in boardrooms - A literature review. Cogent Economics and Finance. 7(1):1644703. https://doi.org/10.1080/23 322039.2019.1644703

  • Sahu, P. (2021). Independent Directors: Three-fourths central public sector undertakings flout norm. April 2021. https://www.financialexpress.com/economy/ three-fourths-central-public-sector-undertakings-floutnorm/2203733/

  • Tukur, G. and Balkisu, A. A. (2014). Corporate board diversity and financial performance of insurance companies in Nigeria: An application of panel data approach. Asian Economic and Financial Review. 4(2):257–77.


Abstract Views: 142

PDF Views: 92




  • Women on Board and its Impact on Performance of NIFTY50 Firms

Abstract Views: 142  |  PDF Views: 92

Authors

G. Bharathi Kamath
Associate Professor, Mumbai School of Economics and Public Policy, University of Mumbai, Mumbai – 400098, Maharashtra,, India

Abstract


This research paper examines the relationship between women representation on Board of Directors and the financial performance of the NSE-NIFTY50 listed firms. The return on assets and assets turnover ratio is used as measure of firm’s performance; using panel regression for a period of 2014-15 to 2018-19, the impact of specific board characteristics including diversity index is assessed. It is observed that the productivity of these firms is clearly affected by the gender diversity. The profitability ratio is not seeing any significant impact. Though there is an overall increasing trend in the representation of women on board in sample firms, just a small proportion of women may not serve the true purpose in affecting the strategic decision making. Therefore,it is suggested that the representation should be more than the mandated number, to see its true impact on firm performance in the long run.

Keywords


Board Characteristics, Board of Directors, Financial Performance, India, NIFTY50, Women Directors

References





DOI: https://doi.org/10.18311/%2Fsdmimd%2F2022%2F30512