Female board members: the effect of director affiliation

Abstract

Purpose This study aims to investigate whether female directors have an effect on company financial performance in a patriarchal emerging country that has a collectivistic culture with a substantial gender equality gap and is characterized with a paternalistic management culture. In addition, it aims to investigate whether the affiliations of female directors matter performance-wise in a setting where the majority of the companies are ultimately controlled by large business groups including families. Design/methodology/approach The current study uses a unique hand-collected data set that covers all non-financial public companies quoted at the Borsa Istanbul between the years 2009 and 2017. To investigate the relationships between the presence and ratio of female directors and company financial performance, the current study uses the pooled ordinary least squares method, as well as the firm-fixed effects method to overcome potential omitted variables problems and various generalized method of moments methods to overcome potential reverse causality problems. Findings The findings of the current study demonstrate that the presence and percentage of female directors both have a positive effect on company financial performance in a cultural setting where the opposite might be expected. They also present evidence suggesting that the effect becomes larger as the level of the independence of female directors becomes greater. Originality/value The current study demonstrates that the presence of female directors on boards has a positive effect on company financial performance, even in a cultural setting that is very different from those of countries where the majority of previous studies on female directors are conducted on. In addition, it demonstrates how company financial performance varies with the level of the affiliation of female directors.

Female directors on audit committees, the gender of financial experts, and internal control weaknesses: evidence from Iran

“…As Li and Harrison (2008) indicate, a country's culture significantly affects the structure of boards. This is consistent with institutional theory and shows that the board's performance and composition are rooted in national culture (Aguilera, 2005;Arioglu, 2020b), that is, the benefits of board diversity may vary depending on national cultures (Chijoke-Mgbame et al, 2020). Developing countries, especially the MENA countries, are male-dominated societies and men still dominate decision-making at domestic and organisational levels (Sarhan et al, 2019).…”

“…Furthermore, Iran has a collectivist culture. 7 As Arioglu (2020b) states, the members of a society with collectivist culture may not highly value gender diversity, and the presence of members of diverse gender is likely to negatively affect group communications. Therefore, more tensions and the lack of communication between members may weaken the dynamics and cohesion of groups (especially of small groups such as the AC) and disrupt decisionmaking processes and effective and efficient monitoring (Sultana et al, 2015).…”

Gendering Corporate Boards and Conditional Effectiveness of Board Processes: Insights from a Sub-Saharan African Country

“…Empirically, in the USA, Srinidhi et al (2020) showed that independent female directors are more effective in bringing dynamics into the board process, relative to their male counterparts, with respect to changing of board norms (board processes), as well as enhancing board performance. Likewise, in Instanbul, Arioglu (2020) suggested that women on corporate boards improve corporate financial outcomes in men-dominated cultural societies because women ensure better monitoring and bring enriched ideas and perspectives, which inject creativity and innovation in board process by improving decision-making in the boardroom. On the contrary, Martinez-Jimenez et al (2020) found that women on corporate boards have a negative effect on board effectiveness (strategic control, organizational innovation and decision-making), but they have insignificant effect on business performance.…”

“…Empirically, various studies have examined the influence of female directors or gender diversity on the effectiveness of board processes and organizational outcomes. While some found positive results (e.g., Arioglu, 2020;Li & Li, 2020;Kilic & Kuzey, 2016;Moussa, 2019;Song et al, 2020), others found negative outcomes (Comi et al, 2020;Martinez-Jimenez et al, 2020;Yang et al, 2019) or no significant impact (e.g., Arora & Singh, 2020;Zajiji et al, 2020). This suggests that there is still a lack of consensus in the extant research on the contribution of women on corporate boards to the effectiveness of board processes and organizational effectiveness.…”

Mujer, Gobierno Corporativo y eficiencia económica: análisis para el caso de las empresas familiares agroalimentarias

“…En un estudio muy reciente (Arioglu, 2020), se demostró que la presencia y el porcentaje de mujeres en el consejo directivo tiene un efecto positivo en el desempeño financiero de las empresas. Del mismo modo, Joecks et al (2013) manifestaron un efecto positivo en el rendimiento empresarial cuando aumenta la presencia femenina en los equipos directivos.…”