Do women on boards enhance firm performance? Evidence from top Indian companies

This paper examines whether gender diversity (GD) on corporate boards influences financial performance (FP) of Indian firms using System Generalized Methods of Moments (GMM) methods by considering panel data of 364 firms during 2017 to 2021, comprising of 1820 firm-year observations. The study reveals that the mere presence of a woman director (WD) on boards makes no difference in financial performance. Presence of WDs as a significant portion of the boards and their active roles in the functioning and governance of companies positively contribute to firms' financial performances and economic value creation. Regarding other governance parameters, the study shows that larger boards do not necessarily improve firm performance. Also, independent directors do not necessarily add value to corporate performance and value creation. While a higher promoter's stake is an important factor for Indian companies to drive corporate performance, firms with separate CEO and chairperson outperform firms with CEO duality. The study also reveals that the covid 19 pandemic has negatively influenced the financial performance and economic profit generation of the Indian firms. This study is important for several reasons. First, this study considers the period (2017–2021) when Indian companies adopted new financial reporting practices (IND-AS) in line with International Financial Reporting System (IFRS), the mandatory quota system of women directors' appointment is implemented and new corporate governance norms are implemented. Hence, our study contributes to the literature by proving meaningful insights on the role of gender diversity and other corporate governance parameters on financial performance of Indian firms in the light of newly adopted accounting and financial reporting practices. Second, few previous India based studies have mostly used pooled OLS or fixed effect models, and did not address the endogeneity problem in different forms like Dynamic Endogeneity, Simultaneity, and Unobserved Heterogeneity. This paper addresses the endogeneity problem appropriately by using the system generalized method of moments (GMM) while modelling the relation between WDs and firms' FP. Therefore, the findings of this study are more reliable and unbiased and can be useful for effective policy making on gender diversity and corporate governance issues. Third, few prior studies which have looked into the role of WDs on FP of Indian firms, have mostly used return on assets (ROA), return on equity (ROE) and Tobin's Q as performance parameters. Here, in addition to ROA, ROE and Tobin's Q, we also use economic value added (EVA) as indicators of corporate performance to understand the role of WDs on economic value creation for companies. The EVA is considered as modern technique to measure the economic profit earned by a firm, and it has gained huge popularity among companies as an improved technique for measuring financial performance for companies. To the best of our knowledge, the role of WDs on economic value creation by firms has not been investigated before particularly in the Indian context. This is another unique contribution of this study. Fourth, the Covid 19 pandemic had impacted global economy severely and India was no exception. Financial performances of most Indian firms were negatively impacted due to the nationwide lockdown and uncertainties about production, revenue and earnings. This study considers both the pre and post Covid 19 pandemic period in examining our central research question using a year dummy. Therefore, our study also captures whether the covid 19 pandemic has actually impacted the financial performance of Indian firms, while modelling this relation. This is another valuable and unique contribution of this study to the literature. The findings of this study provide an understanding of how board gender diversity and other governance parameters influence financial performance of Indian firms in an emerging market context. The outcomes are also explained and aligned with the relevant policy implications in th light of recent Indian corporate governance norms and policies. These findings are useful to the companies and policymakers, as they can use these findings while designing effective boards, which can be useful in improving firm performance. Board of directors, investors, regulators, and policymakers can effectively use these findings to understand how gender diverse boards and other corporate governance parameters influence firms' financial performance under the concentrated ownership pattern.

Leadership in heels: Women on boards and sustainability in times of COVID-19

From a business perspective, the health and socio-economic effects of the COVID-19 have affected a firm's stakeholders to a different extent, making it necessary for them to develop sustainable initiatives that allow them to meet their needs. Decisions must be made and implemented in a recessionary environment in which companies debate whether it is economically reasonable to promote them and whether they can afford not to do so. In this work, based on the theory of social identity, we argue that these business commitments will have been promoted in companies with boards of directors that have a greater female presence. The results obtained for a sample of 4821 multinationals confirm that the repercussion of incidental affect on the social identity of the in-group of female directors has partially slowed the setback that business sustainability has suffered due to the pandemic, which is especially important with respect to good governance policies and practices and guaranteeing the social and environmental commitment of previous years. This evidence has important theoretical and practical implications, contributing the current debate on strategic decisions regarding sustainability and the benefits associated with board gender diversity. © 2023 The Authors. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd.

Board attributes and CSR expenditure before and during COVID-19

PurposeThis study aims to investigate the impact of board attributes on the corporate social responsibility (CSR) expenditure of the listed firms before (2019) and during (2020) COVID-19 in Nigeria. Design/methodology/approachThe data were manually extracted from the annual reports of all the listed companies that published their reports for the years. A total of 266 firm-year observations were generated, comprising 140 and 126 observations for 2019 and 2020, respectively. FindingsThe results indicate that the frequency of board meetings and foreign directors on the board significantly influence CSR expenditure before and during COVID-19. Board independence had a significant positive association with CSR expenditure before COVID-19 but insignificantly positive during it. However, board size and gender diversity do not influence CSR expenditure before and during COVID-19. Research limitations/implicationsThe study used secondary data from the annual reports to compare the impact of board attributes on the CSR expenditures of listed firms in Nigeria between 2019 and 2020. Practical implicationsProviding effective CSR regulations and incentives could motivate or mandate the board of directors to incur CSR expenditure within the company's financial capacity for society's welfare, particularly under challenging times like COVID-19. Social implicationsEncouraging firms to incur more CSR expenditures to their ability will contribute to poverty alleviation and improve socio-economic development. Originality/valueThis study is one of the few that investigated the effects of board characteristics on CSR expenditure for the welfare of the poor and the needy. Besides, it uniquely focused on comparing the results before and during COVID-19.

The Association between Outside Directors’ Compensation and ESG Performance: Evidence from Korean Firms

Environmental, social, and corporate governance (ESG) has become essential for corporate sustainability. Among ESG activities, we focus on governance structure since firms can properly engage in activities related to environmental and social responsibility only when their corporate governance structures are well established. Outside directors play an important role in governance structure since they monitor the management and provide expertise to the board of directors. In this study, we pay particular attention to the compensation of outside directors, which reflects the effort, expertise, and independence of outside directors. Based on data from listed firms on the Korea Stock Exchange in South Korea between 2014 and 2020, we examine the association between outside directors’ compensation and ESG performance in certain firms with unique governance structures, namely, chaebols (or family firms). We find that the compensation of outside directors is positively associated with ESG performance, implying that outside directors’ compensation motivates effective monitoring and advisement of management and has an incremental effect on ESG performance. We suggest that the compensation of outside directors is one of the key factors that can significantly affect ESG performance. Therefore, investors and policymakers may evaluate whether a firm is doing well in terms of ESG activities by examining the compensation of outside directors.

The Relationship betweeen Corporate Governance and Firms Performance in a Small Stock Market

This study analyzes the relationship between Corporate Governance and firm’s performance, considering a sample of Portuguese listed firms for the 2010-2020 period, exploring also the effect of COVID-19 on companies’ performance. The results show that higher level of managerial ownership and gender diversity impact positively on firms’ performance. However, no evidence was found that a representation of three or more female directors leads to an increase in performance. In addition, the results suggest that there is a negative relationship between leverage and performance when performance is analyzed with a market-based performance measure. Finally, the study found evidence that the COVID-19 had a negative impact on corporate performance. © 2022 IEEE Computer Society. All rights reserved.

Managing the COVID-19 pandemic: Preliminary evidence from global banks

The COVID-19 pandemic represents the most complex test for financial institutions since the global crisis of 2007. During this period, the boards of financial institutions, especially banks, had to make strategic decisions quickly, to address the effects of this crisis efficiently and effectively. Boards had to make the right decisions to withstand the shocks caused by the pandemic. The role of the board (or supervisory board) in managing banks has been under scrutiny by academic researchers and professionals during the current pandemic crisis. Since the outbreak of covid-19, boards have faced many tough decisions. Boards promptly facilitated the introduction of a number of COVID-19 response policies, including the establishment of specific teams to prevent and control the effects of the pandemic, to support the community, and to the protect and support employees and clients. The objective of this paper is to understand the role of boards of global banks during the COVID-19 pandemic, in particular to determine which were the most effective policy decisions and to outline the related underlying trends. The results of this research may allow the identification of best practices for the management of financial institutions and provide a useful reflection for the various stakeholders, including regulatory and supervisory authorities. © Henry Stewart Publications.