Gender diversity in corporate boardrooms and risk disclosure: Indian evidence

Abstract

Purpose The study aims to pervade the gap in the domain of risk disclosure and gender diversity, which is comparatively uncharted. Gender diversity being a crucial element of corporate governance can deepen understanding on the issue in the backdrop of a developing country such as India, so this study aims to investigate the relationship between gender diversity on board and corporate risk disclosure. Design/methodology/approach Four measures of gender diversity, i.e. BLAU index, SHANNON index, proportion of women directors on board and female dummies, have been deployed to measure gender diversity. The empirical analysis is premised on a sample of S&P BSE 100 index pertaining to the 2018–2019 financial year; which eventually gets reduced to 70 non-financial firms after eliminating 30 financial firms. To examine the impact of gender diversity on corporate risk disclosure, hierarchical regression has been used. Additionally, two-stage least square regression analysis has been performed for checking the endogeneity issues in data and validating the findings of the study. Findings The main findings unveil that gender diversity positively impacts corporate risk disclosure. Confirming the agency theory and resource dependency theory, its alternative measures like BLAU index, SHANNON index, proportion of women directors and female dummy divulged to positively impact corporate risk disclosure. When women dummy has been used, analysis unmasked that firms electing more than one female director on board has a higher positive impact on corporate risk disclosure as compared to firms engaging only one women director on board. Research limitations/implications The study is undertaken in the Indian settings, which has its own set of legislative laws, whereas there is need to reaffirm the relationship applying cross-country analysis. Furthermore, there is huge hollowness in the domain of gender diversity and risk disclosure that calls for empirical evidence to unearth futuristic vision. Practical implications The research presents managerial implications for the managers to promote gender egalitarianism by electing higher quantum of women directors on board to achieve global standards of maintaining higher risk disclosure. Adequate risk disclosure on a gender-diverse board further assures the investors that their interest will remain intact in the organization that meets legal requirements by embracing gender equality in employment. A woman in the boardrooms incarnates transparency through divulgence of risk information, which suffices the informational needs of investors. In addition, the findings insists the regulators towards staunch enforcement of effective corporate governance practice through increasing the proportion of women directors on board as they assist in dispelling risk disclosure, which will avert sceptical ambitions of managers and deconstruct their stereotype attitude towards women. Originality/value This study is a novel contribution in expanding the risk disclosure literature by analyzing the unexplored impact of gender diversity on the extent of corporate risk disclosures in India.

An empirical examination of board-related and firm-specific drivers on risk disclosure by listed firms in Kenya: a mixed-methods approach

“…Likewise, board independence positively influences RD (Abraham and Cox, 2007; Khandelwal et al , 2020), whilst Saggar and Singh (2017) and Ibrahim et al (2019) found no association. Also, board gender diversity positively influences RD (Ntim et al , 2013; Saggar et al , 2021), whilst Allini et al (2014) found a negative association.…”

“…Further, women are inquisitive by nature which makes them better at influencing corporate outcomes than their male counterparts (Carter et al, 2003). Empirically, the majority of studies found that board gender diversity positively influences RD (Kılıc ¸and Kuzey, 2018;Salem et al, 2019;Bufarwa et al, 2020;Khandelwal et al, 2020;Saggar et al, 2021), whereas Allini et al (2014) found a negative association. In Kenya, the CMA Code of Corporate Governance does not set any specific diversity target for listed companies.…”

“…Prior studies on the relationship between board size and RD provide mixed findings. For instance, (Mokhtar and Mellett, 2013;Ntim et al, 2013;Nkuutu et al, 2020), found a positive association, whilst Mousa and Elamir (2014) and Grassa et al (2021) found a negative association, other studies found no association (Salem et al, 2019;Saggar et al, 2021). In Kenya, the CMA Code of Corporate Governance recognises the role of directors in overseeing corporate reporting [Capital Markets Authority (CMA), 2015].…”

“…Gender is one of the most debated elements of diversity and refers to the presence of female directors on the board (Saggar et al, 2021). Agency theory posits that female directors enhance monitoring and reporting through board independence (Elzahar and Hussainey, 2012;Ntim et al, 2013).…”

“…The 2007/2008 financial crisis and cases of corporate failure have highlighted the need for improved risk disclosure (RD) by stakeholders (Elshandidy et al, 2018a(Elshandidy et al, , 2018bGonidakis et al, 2020;Saggar et al, 2021). To meet this expectation, firms must demonstrate their stewardship by providing useful risk information (Khandelwal et al, 2020).…”