Female in The Boardroom and Firm Performance: An Insight of Indonesia’s Firms

Abstract

The purpose of this research is to determine the impact of female board members on firm performance. This study employed a purposive sampling technique with a research sample comprised of 264 non-financial companies listed on the Indonesia Stock Exchange between 2013 and 2019. As proxies for the independent variable of females in the boardroom, this study examines female directors' presence, a dummy variable for female CEOs, the proportion of female directors, and female directors' business ability. The return on assets (ROA), return on equity (ROE), and Tobin's Q are all proxies for gauging corporate performance. This study's analysis technique is robust regression analysis. Female board members had the greatest influence on firm performance, according to the findings. Overall, the female CEO dummy serves as a proxy for the strength of the company's performance.

Keywords:

Boardroom business expertise female director gender diversity robust regression

References

Abebe, M. A., Li, P., Acharya, K., & Daspit, J. J. (2020). The founder chief executive officer: A review of current insights and directions for future research. Corporate Governance: An International Review, 28(6), 406-436. https://doi.org/10.1111/corg.12348

Abdullah, H. O., & AL-Abrrow, H. (2023). Predicting positive and negative behaviors at the workplace: Insights from multi-faceted perceptions and attitudes. Global Business and Organizational Excellence, 42(4), 63-80. https://doi.org/10.1002/joe.22179

Ali Gull, A., Hussain, N., Akbar Khan, S., Nadeem, M. & Mansour Zalata, A. (2023). Walking the talk? A corporate governance perspective on corporate social responsibility decoupling. British Journal of Management, 34(4), 2186-2211. https://doi.org/10.1111/1467-8551.12695

Alkebsee, R. H., Habib, A., Huang, H. J., & Tian, G. (2022). The gender-diverse audit committee and audit report lag: Evidence from China. International Journal of Auditing, 26(2), 314-337. https://doi.org/10.1111/ijau.12278

Baranchuk, N., & Dybvig, P. (2009). Consensus in diverse corporate boards. Review of Financial Studies, 22(2), 715-747. https://doi.org/10.1093/rfs/hhn052

Bezemer, P.-J., Pugliese, A., Nicholson, G., & Zattoni, A. (2023). Toward a synthesis of the board-strategy relationship: A literature review and future research agenda. Corporate Governance: An International Review, 31(1), 178-197. https://doi.org/10.1111/corg.12481

Bhat, K. U., Chen, Y., Jebran, K., & Memon, Z. A. (2019). Board diversity and corporate risk: Evidence from China. Corporate Governance, 20(2), 280-293. https://doi.org/10.1108/CG-01-2019-0001

Cambrea, D. R., Paolone, F., & Cucari, N. (2023). Advisory or monitoring role in ESG scenario: Which women directors are more influential in the Italian context? Business Strategy and the Environment, 32(7), 4299-4314. https://doi.org/10.1002/bse.3366

Cordeiro, J. J., Profumo, G., & Tutore, I. (2020). Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures. Business Strategy and the Environment, 29(3), 1127-1144. https://doi.org/10.1002/bse.2421

Cornelissen, J. P., Akemu, O., Jonkman, J. G. F., & Werner, M. D. (2021). Building character: The formation of a hybrid organizational identity in a social enterprise. Journal of Management Studies, 58(5), 1294-1330. https://doi.org/10.1111/joms.12640

Doan, T., & Iskandar-Datta, M. (2020). Are female top executives more risk-averse or more ethical? Evidence from corporate cash holdings policy. Journal of Empirical Finance, 55, 161-176. https://doi.org/10.1016/j.jempfin.2019.11.005

Eide, A. E., Saether, E. A., & Aspelund, A. (2020). An investigation of leaders’ motivation, intellectual leadership, and sustainability strategy in relation to Norwegian manufacturers’ performance. Journal of Cleaner Production, 254, 120053, 1-12. https://doi.org/10.1016/j.jclepro.2020.120053

Gordini, N., & 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

Gould, J. A., Kulik, C. T., & Sardeshmukh, S. R. (2018). Trickle-down effect: the impact of female board members on executive gender diversity. Human Resources Management, 57(4), 931-945. https://doi.org/10.1002/hrm.21907

Greene, D., Intintoli, V. J., & Kahle, K. M. (2020). Do board gender quotas affect firm value? Evidence from California senate bill no. 826. Journal of Corporate Finance, 60, 101526. https://doi.org/10.1016/j.jcorpfin.2019.101526

Greiner, M., Kim, J., & Thor, J.C. (2023). Narcissistic CEOs and their corporate political activity. Journal of Business Research, 163, 113930. https://doi.org/10.1016/j.jbusres.2023.113930

Gyapong, E., Ahmed, A., Ntim, C. G. & Nadeem M. (2019). Board gender diversity and dividend policy in australian listed firms: The effect of ownership concentration. Asia Pacific Journal of Management, 38(2), 603-643. https://doi.org/10.1007/s10490-019-09672-2

Hatane, S. E., Supangat, S., Tarigan, J., & Jie, F. (2019). Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors. Corporate Governance, 19(6), 1362-1376. https://doi.org/10.1108/CG-02-2019-0071

Hoang, T., Suh, J., & Sabharwal, M. (2022). Beyond a numbers game? Impact of diversity and inclusion on the perception of organizational justice. Public Administration Review, 82(3), 537-555. https://doi.org/10.1111/puar.13463

Islam, R., French, E., & Ali, M. (2022). Evaluating board diversity and its importance in the environmental and social performance of organizations. Corporate Social Responsibility and Environmental Management, 29(5), 1134-1145. https://doi.org/10.1002/csr.2259

Issa, A., & Bensalem, N. (2023). Are gender-diverse boards eco-innovative? The mediating role of corporate social responsibility strategy. Corporate Social Responsibility and Environmental Management, 30(2), 742-754. https://doi.org/10.1002/csr.2385

Issa, A., & Zaid, M. A. A. (2023). Firm's biodiversity initiatives disclosure and board gender diversity: A multi-country analysis of corporations operating in Europe. Business Strategy and the Environment, 32((7), 4991-5007. https://doi.org/10.1002/bse.3404

Issa, A., Zaid, M. A. A., & Hanaysha, J. R. (2022). Exploring the relationship between female director's profile and sustainability performance: Evidence from the Middle East. Managerial and Decision Economics, 43(6), 1980-2002. https://doi.org/10.1002/mde.3503

Jensen, M. C. (1986). Agency cost of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329. https://www.jstor.org/stable/1818789

Kauff, M., Asbrock, F., & Schmid, K. (2020). Pro-diversity beliefs and intergroup relations. European Review of Social Psychology, 32(2), 269-304. https://doi.org/10.1080/10463283.2020.1853377

Kim, D., & Starks, L. T. (2016). Gender diversity on corporate boards: Do women contribute unique skills? American Economic Reviews, 106(5), 267-271. http://doi.org/10.1257/aer.p20161032

Kong, G., Kong, T.D., Qin, N., & Yu, L. (2022). Ethnic diversity, trust, and corporate social responsibility: The moderating effects of marketization and language. Journal of Business Ethics, 187, 449-471. https://doi.org/10.1007/s10551-022-05236-5

Knyazeva, A., Knyazeva, D., & Masulis, R.W. (2013). The supply of corporate directors and board independence. Review of Financial Studies, 26(6), 1561-1605. https://doi.org/10.1093/rfs/hht020

Lassoued, N., & Khanchel, I. (2023). Voluntary CSR disclosure and CEO narcissism: The moderating role of CEO duality and board gender diversity. Review of Managerial Science, 17, 1075-1123. https://doi.org/10.1007/s11846-022-00555-3

Lee, H. W., Choi, J. N., & Kim, S. (2018). Does gender diversity help teams constructively manage status conflict? An evolutionary perspective of status conflict, team psychological safety, and team creativity. Organizational Behavior and Human Decision Processes, 144, 187-199. https://doi.org/10.1016/j.obhdp.2017.09.005

Lee, S., Jeon, S., & Lee, B. (2019). Security controls for employees’ satisfaction: Perspective of controls framework. SAGE Open, 9(2), 1-17. https://doi.org/10.1177/2158244019853908

Love, I., Nikolaev, B. & Dhakal, C. (2023). The well-being of women entrepreneurs: the role of gender inequality and gender roles. Small Business Economics. https://doi.org/10.1007/s11187-023-00769-z

Magrelli, V., Rondi, E., De Massis, A., & Kotlar, J. (2020). Generational brokerage: An intersubjective perspective on managing temporal orientations in family firm succession. Strategic Organization, 20(1), 164-199. https://doi.org/10.1177/1476127020976972

Martínez-Alonso, R., Martínez-Romero, M. J., & Rojo-Ramírez A. A. (2020). Refining the influence of family involvement in management on firm performance: The mediating role of technological innovation efficiency. BRQ Business Research Quarterly, 25(4), 337-351. https://doi.org/10.1177/2340944420957330

Mishra, A., & Müller, C. L. (2022). Robust regression with compositional covariates. Computational Statistics & Data Analysis, 165, 107315. https://doi.org/10.1016/j.csda.2021.107315

Mohsen Al-Absy, M.S. (2023). Impactful women directors and earnings management. Cogent Business & Management, 9(1). https://doi.org/10.1080/23311975.2022.2148873

Pandey, N., Andres, C., & Kumar, S. (2023). Mapping the corporate governance scholarship: Current state and future directions. Corporate Governance: An International Review, 31(1), 127-160. https://doi.org/10.1111/corg.12444

Porcena, Y.-R., Parboteeah, K. P., & Mero, N. P. (2021). Diversity and firm performance: Role of corporate ethics. Management Decision, 59(11), 2620-2644. https://doi.org/10.1108/MD-01-2019-0142

Reino, A., Roigas, K., & Müürsepp, M. (2020). Connections between organizational culture and financial performance in Estonian service and production companies. Baltic Journal of Management, 15(3), 375-393. https://doi.org/10.1108/BJM-01-2019-0017

Roque, A., Moreira, J. M., Dias Figueiredo, J., Albuquerque, R., & Gonçalves, H. (2020). Ethics beyond leadership: can ethics survive bad leadership? Journal of Global Responsibility, 11(3), 275-294. https://doi.org/10.1108/JGR-06-2019-0065

Safiullah, Md., Akhter, T., Saona, P., Azad, Md.A.K. (2022). Gender diversity on corporate boards, firm performance, and risk-taking: New evidence from Spain. Journal of Behavioral and Experimental Finance, 35, 100721. https://doi.org/10.1016/j.jbef.2022.100721

Sanchez-Marin, G., Lozano-Reina, G., Baixauli-Soler, J. S., & Lucas-Perez, M.E. (2017). Say on pay effectiveness, corporate governance mechanisms, and CEO compensation alignment. BRQ Business Research Quarterly, 20(4), 226-239. https://doi.org/10.1016/j.brq.2017.07.001

Sapienza, P., Zingales, L., & Maestripieri, D. (2009). Gender differences in financial risk aversion and career choices are affected by testosterone. Proceedings of the National Academy of Sciences, 106(36), 15268-15273. https://doi.org/10.1073/pnas.0907352106

Solomon, S. J., Bendickson, J. S., Marvel, M. R., McDowell, W. C., & Mahto, R. (2021). Agency theory and entrepreneurship: A cross-country analysis. Journal of Business Research, 122, 466-476. https://doi.org/10.1016/j.jbusres.2020.09.003

Song, H. J., Yoon, Y. N., & Kang, K. H. (2020). The relationship between board diversity and firm performance in the lodging industry: The moderating role of internationalization. International Journal of Hospitality Management, 86, 102461. https://doi.org/10.1016/j.ijhm.2020.102461

Teodosio, J., Vieira, E., & Madaleno, M. (2021). Gender diversity and corporate risk-taking: A literature review. Managerial Finance, 47(7) 1038-1073. https://doi.org/10.1108/MF-11-2019-0555

Tran, H., & Turkiela, J. (2020). The powers that be: Concentration of authority within the board of directors and variability in firm performance. Journal of Corporate Finance, 60, 101537. https://doi.org/10.1016/j.jcorpfin.2019.101537

Valenti, A., & Horner, S. (2020). The human capital of boards of directors and innovation: An empirical examination of the pharmaceutical industry. International Journal of Innovation Management, 24(06). https://doi.org/10.1142/S1363919620500565

Wang, S., & Lv, J. (2023). CEO-TMT faultline and corporate green innovation: The contextual role of Confucian culture. Managerial and Decision Economics, 44(8), 4422-4438. https://doi.org/10.1002/mde.3959

Xie, L., Zhou, J., Zong, Q., & Lu, Q. (2020). Gender diversity in R&D teams and innovation efficiency: Role of the innovation context. Research Policy, 49(1). https://doi.org/10.1016/j.respol.2019.103885

Yan, X., Wang, X., & Sheng Liu. (2023). A U-shaped relationship between real financialization and financial risk: Evidence from a single threshold model. Finance Research Letters, 56, 104017. https://doi.org/10.1016/j.frl.2023.104017

Zirgulis, A., Huettinger, & M. Misiunas, D. (2021). No woman, no aggressive tax planning? A study on CEO gender and effective tax rates in the Lithuanian retail sector. Review of Behavioral Finance, 14(3), 394 - 409. https://doi.org/10.1108/RBF-09-2020-0232

Reference by