Gender diversity and firm value: evidence from UK financial institutions

Abstract

Purpose The purpose of this paper is, first, to empirically examine whether the appointment of females (board gender diversity) to the corporate boards of UK financial institutions can improve firm value, and second, to examine whether having females on the boards of UK financial institutions can impact firm value during the pre-/post-global financial crisis periods. Design/methodology/approach The paper uses secondary data obtained from DataStream covering 63 financial institutions over a period of 12 years. A number of additional statistical estimations, including random effects and fixed effects, are conducted to test the robustness of the findings. Findings The outcome of this empirical research shows that the presence of females on the corporate boards of UK financial institutions has a positive and statistically significant relationship with firm value. The authors’ evidence reveals a positive and statistically significant impact on the firm’s value prior to the financial crisis, that is, during the pre-crisis period (2000-2006), meaning that women contributed significantly to the firm’s value. However, after the financial crisis, the presence of females on the board had no significant effect on the firm’s value. A reasonable explanation may be that, whilst the financial crisis was over in the period 2009-2011, the entire UK economy was still experiencing an economic downturn, and financial firms were no exception, irrespective of whether there was female representation on any corporate board. Overall, the findings are consistent with the prior studies. Practical implications The results have practical implications for governments, policy-makers and regulatory authorities, by indicating the importance of women to corporate success. Originality/value Despite several research projects on board gender diversity (BGD), this research is unique compared to the previous empirical studies, primarily because it is the first-time research of this nature is empirically ascertaining BGD and firm value in UK financial institutions, also during the pre-/post-financial crisis era. This paper contributes to the corporate governance literature by offering new insights on board diversity and firms’ value relationship. Overall, the results help fill any gaps on gender diversity and firm value in UK financial institutions.

Board Gender Diversity and Its Impact on Firm Value and Financial Risk

“…Dewan direksi dengan karakteristik yang beragam dapat membawa dampak terhadap perusahaan jika dewan direksi tersebut bisa menyelaraskan sumber daya yang dimilikinya dengan lingkungan eksternal perusahaan. Keberadaan direktur wanita bisa menambah variasi dari sumber daya perusahaan dan menciptakan perspektif yang beragam tentang pengelolaan sumber daya lainnya, sehingga pengelolaan sumber daya lainnya dapat menjadi lebih efisien (Agyemang-Mintah & Schadewitz, 2017).…”

Nudging toward diversity in the boardroom: A systematic literature review of board diversity of financial institutions

“…Board diversity, for example, can assist firms in gaining different information and wider exposure to the environment from suppliers, customers, policymakers, as well as social groups and competitors (Elsharkawy, Paterson, & Sherif, 2018; Horbach & Jacob, 2018; Tingbani, Chithambo, Tauringana, & Papanikolaou, 2020). Moreover, board diversity enhances board independence and decision‐making quality as it takes the views of underrepresented groups into account (Agyemang‐Mintah & Schadewitz, 2019; Elmagrhi, Ntim, Elamer, & Zhang, 2018; Ferrero‐Ferrero, Fernández‐Izquierdo, & Muñoz‐Torres, 2015; Glass, Cook, & Ingersoll, 2016). Supporting this view, García‐Meca, García‐Sánchez, and Martínez‐Ferrero (2015) suggest that more diversity on the board helps to represent all shareholders better and promote better discussion within boardrooms.…”

تأثیر خصائص مجلس الإدارة علی الإفصاح عن المعلومات المستقبلیة دلیل من بورصة الأوراق المالیة المصریة (باللغة الانجلیزیة)

“…This was followed in 2015 by Spain was 40 percent, France was 40 percent by 2016, Italy in 2015 was 33.3 percent and The Netherlands in 2016 was 30 percent (Bertoni et al;2014). The European Commission had been controlling the growth of representation of women in board in all countries that in their membership and by 2020 had set a target of 40 percent; nevertheless, no formal mandatory requirements had been established (Agyemang-Mintah & Schadewitz, 2019). Wang and Oliver (2009) showed that the ASX CG Council in Australia used the "if not, why not" approach to promote gender diversity in all Australian listed companies.…”

“…For example, boards that had gender diversity might provide a lot of opinions and perspectives to discussions in boards meetings, so the board can be directed for having improved plans and better decisions. (Agyemang-Mintah & Schadewitz, 2019) According to Triki (2018), the participation of women directors in the firm's board encouraged regularly better ideas, communication and participation; therefore, gender diversity might help in serving more needs and demands of wider base of investors and other stakeholders. So, having different points of view on boards could improve the capability of the firm to serve needs of wider base of stakeholders; including stockholders, creditors, lenders, auditors, and analysts.…”

“…Board independence can be reflected by a board that is composed of a majority of independent outsiders which is an indicator of board effectiveness ( Bertoni et al;2014). For gender diversity, it was preferable for any company to have males and females in the board of directors" composition (Agyemang-Mintah and Schadewitz, 2019). Finally, CEO Duality happens when the Chief Executive Officer hold the position of board chairman of the company (Duru et al;.…”