Board diversity and working capital management strategies: evidence from energy sector of Pakistan

Khan, Ammar Nawaz; Yahya, Farzan; Waqas, Muhammad

doi:10.1108/jeas-09-2021-0183

Cited by 14 publications

(22 citation statements)

References 59 publications

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“…This provides strong support for the argument that female executives, who are generally characterized by greater risk aversion and lower confidence levels, make less risky policies, including conservative policies, in their WCM. Our results are consistent with Nastiti et al (2019) and Khan et al (2022), who find that female top managers are likely to implement more conservative WCM policies.…”

Section: Regression Analyses and Discussionsupporting

confidence: 91%

“…Conversely, independent female directors tend to avoid riskier decisions by choosing to hold a higher level of WC. This is consistent with Khan et al (2022) that BGD encourages a conservative WCM approach, and it supports the risk aversion of female directors (Nastiti et al , 2019).…”

Section: Resultssupporting

confidence: 84%

“…In this respect, Nastiti et al (2019) contend that female top managers try to prevent their firms from stock out and ensure that firms' liquidity enables them to repay their due short-term liabilities by choosing more conservative WCM policies. Khan et al (2022) report that WOB are more concerned about stock-out or liquidity risk. Accordingly, the excessive prudence among female determines that women directors follow less risky or conservative strategy while managing their firm's WC.…”

Section: Executive Rolesmentioning

confidence: 99%

“…Resource dependence theory is also one of the prominent theories that encourage board diversity, as they bring technical, financial and social expertise to the firm (Khan et al , 2022). Anderson et al (2011) argue that a diversity board is endowed with a sizeable number of skills, which would, in turn, improve the monitoring processes.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

See 3 more Smart Citations

Female directors and working capital management: aggressive vs. conservative strategy

Guizani

Abdalkrim²

2022

MRR

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Purpose The purpose of this study is to analyze the impact of board gender diversity (BGD) on working capital management (WCM) decision by scrutinizing different positions covered by female board directors. Design/methodology/approach This study uses a panel data regression model with fixed effect estimations and the generalized method of moments (GMM) to determine the impact of BGD on WCM strategy. This study uses a panel data analysis for 277 non-financial firms listed on Bursa Malaysia over the period from 2011 to 2019. Findings The results of this study show that female directors fulfilling either monitoring or executive positions increase the investment in working capital (WC), suggesting a conservative WCM. Precisely, results from this study are consistent with the embedded risk aversion traits of female executives and, hence, preserve high level of investment in WC, which allows superior levels of liquidity to meet firms’ financial commitments. The results also show that Malaysia commitment to gender equality is a key moderator in the female directors – firm WCM relation. The authors find that when the level of gender equality is greater, female directors support firms in adopting aggressive WCM strategies. Practical implications This study’s findings provide insights for corporate decision-makers in helping them to determine the board’s design in term of roles and composition that enhances the efficiency of WC. The results also provide guidelines for policymakers and regulators to formulate strategies that support more female board representation. In this way, firms should appoint more female directors on their boards to ensure prudent WC decisions. Moreover, given that female directors are an important determinant of a firm’s WC policy, investors and various internal or external monitoring groups need to factor boardroom gender diversity into their investing, hiring and monitoring mechanisms. Originality/value While prior research has examined the effect of BGD on firm performance, to the best of the authors’ knowledge, this study is the first to investigate the effect of BGD on the WCM decision.

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Section: Regression Analyses and Discussionsupporting

confidence: 91%

Section: Resultssupporting

confidence: 84%

Section: Executive Rolesmentioning

confidence: 99%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Female directors and working capital management: aggressive vs. conservative strategy

Guizani

Abdalkrim²

2022

MRR

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“…Difference GMM estimator analyze the data after first-differencing to remove the fixed-effects while System GMM improve estimates by distinctly instrumenting two equations in both levels and differences simultaneously.10 The study of Al-Shaer and Zaman (2016) andArayssi et al (2016) employed the data of UK FTSE-350 companies. Compared to European markets, the presence of WOB in South Asian countries is mere symbolic until they reach a certain threshold level(Khan et al, 2022).…”

mentioning

confidence: 99%

Gender diversity, sustainability reporting, CEO overconfidence, and efficient risk‐taking: Evidence from South Asian agri‐food industry

Yahya

Waqas

et al. 2022

Canadian J Agri Economics

Self Cite

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This article aims to understand the impact of board gender diversity (BGD) on the firm's deviation from efficient risk-taking (DERT) along with the mediating effect of sustainability reporting and the moderating effect of CEO overconfidence. The sample consists of 77 South Asian agri-food firms over the period 2010-2019. To account for endogeneity and other statistical biases, we use a system GMM approach. The results show that there is a non-monotonic relationship between BGD and DERT. Consistent with critical mass theory, we find that at least three women on board (WOB) are required to reduce the firm's DERT. The findings of the study also reveal that the overconfident CEO may restrict the female directors to achieve the firm's efficient risk-taking. The evidence further suggests that sustainability reporting quality (SRQ) does not mediate the link between BGD and a firm's DERT. The robustness tests are performed based on alternative risk proxy and the likelihood of financial distress. Our results theoretically support stakeholder, critical mass, and agency perspective that South Asian capital markets should enhance the representation of WOB to mitigate agency conflicts and to improve long-term firm sustainability.

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Exploring the mediating role of corporate social responsibility in the connection between board competence and corporate financial performance amidst global uncertainties

Al Frijat,

Albawwat,

Elamer

2023

Corp Soc Responsibility Env

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Despite the growing literature on corporate social responsibility (CSR), little is known about how the board of directors' competence can affect the CSR‐financial performance relationship during severe uncertainties such as the COVID‐19 outbreak. This paper focuses on exploring the mediating role of CSR in the connection between board competence and corporate financial performance amidst global uncertainties. The sample consists of Jordanian companies listed on the Amman Stock Exchange. Data were analyzed using the partial least square structural equation modeling. The findings show that boards' CSR competence has a direct and indirect positive impact on financial performance. Therefore, boards of directors' CSR competence can be seen as enablers for CSR activities. In this regard, companies could invest more in qualifying board directors to be socially responsible and enhance their role in improving corporate financial performance. This study identifies and provides empirical evidence on a critical enabler of CSR activities (i.e., boards of directors' CSR competence) from a developing country perspective. This, in turn, could widen the management and other stakeholders' understanding of CSR‐enhancing factors and therefore increase its efficiency. We provide theoretical and practical implications to guide regulators and businesses to ensure sustainable development.

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Board diversity and working capital management strategies: evidence from energy sector of Pakistan

Cited by 14 publications

References 59 publications

Female directors and working capital management: aggressive vs. conservative strategy

Female directors and working capital management: aggressive vs. conservative strategy

Gender diversity, sustainability reporting, CEO overconfidence, and efficient risk‐taking: Evidence from South Asian agri‐food industry

Exploring the mediating role of corporate social responsibility in the connection between board competence and corporate financial performance amidst global uncertainties

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