Women directors and market valuation: What are the “Wonder Woman” attributes in banking?

Alharbi, Rana; Elnahass, Marwa; McLaren, Josie

doi:10.1016/j.intfin.2022.101611

Cited by 24 publications

(21 citation statements)

References 140 publications

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“…Baselga-Pascual and Vähämaa (2021), Bhatia and Gulati (2021), Dong et al (2017), Jabari and Muhamad (2020), Mateus and Belhaj (2016), and Stefanovic and Barjaktarovic (2020) concluded that banks perform better when there are more women on bank boards. Some other researchers (Alharbi et al, 2022;Boadi et al, 2022;George & Muiruri, 2022) also show the benefits of having WOB outweigh the costs. Following theoretical discussions and the majority of empirical evidence, our hypotheses are as follows:…”

Section: Women On Board and Bank Performancementioning

confidence: 95%

“…Advocates of gender diversity on boards contend that the presence of WOB correlates with more prudent and sustainable decision-making (Girardone et al, 2021), may improve monitoring effectiveness and decrease agency disputes conflicts (Alharbi et al, 2022), and improve communication across organisational levels and among board members (Karim, 2021). Hence, WOB is suspected of impacting firms' performance from the financial and economic perspective (Lafuente & Vaillant, 2019;Noja et al, 2021) and boosting investor confidence and market value (Alharbi et al, 2022).…”

Section: Women On Board and Bank Performancementioning

confidence: 99%

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Women on Boards and Financial Performance of Malaysian Banks

Rahman,

Mohamad

2023

European Proceedings of Finance and Economics

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Through the perspective of critical mass theory, this study provides empirical evidence on the effect of the existence of women on boards (WOB) on the financial performance of Malaysian banks. Our sample included 90 bank-year observations, which span the years 2013 through 2021. Using panel data regression analysis, this study documents the insignificant impact of the existence of WOB on bank financial performance, implying that the mere presence of WOB does not improve the financial performance of Malaysian banks. Nevertheless, the proportion of WOB and a threshold of 30% WOB have a favourable effect on financial performance as measured by ROE and ROIC. This study recommends that banks concentrate on recruiting the appropriate proportion of female directors and exploiting the possible advantages of a gender-balanced board, as greater diversity may help firms achieve excellent stability, which generally improves financial performance. This study has significant ramifications for regulators, policymakers, and practitioners.

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Section: Women On Board and Bank Performancementioning

confidence: 95%

Section: Women On Board and Bank Performancementioning

confidence: 99%

Women on Boards and Financial Performance of Malaysian Banks

Rahman,

Mohamad

2023

European Proceedings of Finance and Economics

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“…For example, managers who are responsive to investor demands for higher dividends may also be responsive to calls for greater board diversity. This suggests that the proportion of female directors could be endogenous; hence, to deal with the potential endogeneity issue, following Ntim (2015) and Alharbi et al (2022), we used a three-stage least squares (3SLS) estimation to investigate the diversity-dividend connection in a simultaneous system. However, the results in Table 6, Columns (1) and ( 2), show that our results did not change.…”

Section: Robustness Checksmentioning

confidence: 99%

Female directors, the institutional environment and dividend policy: evidence from ASEAN-5 commercial banks

Syahfitri

Risfandy

2023

SEF

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Purpose This paper aims to investigate the impact of female directors on the dividend policies of 96 ASEAN-5 listed commercial banks between 2015 and 2020. Design/methodology/approach This paper developed an econometric model to assess the impact of female directors on the banks’ dividend policies. This paper regressed the payout variable on the female director, legal (institutional environment) variables and several control variables. This paper also considered the interaction between the female and legal variables to assess the moderating impact of the institutional environment. Findings This paper found that female directors positively affected dividend policy and that banks with female directors tended to pay dividends to balance stakeholders’ interests, especially for the minority. This paper also found that the influence of female directors was weaker in countries with strong institutional environments because greater legal protection for shareholders reinforced or replaced corporate governance mechanisms. Originality/value To the best of the authors’ knowledge, this is the first study to investigate gender diversity and its impact on dividend policy using data from ASEAN-5 countries.

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“…As a result, corporate governance in the banking sector exhibits its own attributes and characteristics. This is because of the unique features of the banking system, which aggravate governance problems and can lessen the effectiveness of traditional governance structures like boards and audit committees (Levine, 2004;Laeven, 2013;Alharbi et al, 2022), relative to non-financial firms. Because depositors are the major capital providers, their JAEE 14,2 interests may deviate from shareholders' interests.…”

Section: Governance Mechanisms and Information Valuementioning

confidence: 99%

“…Boards of directors alongside audit committees are marked as key “internal governance mechanisms” in banks which play a vital role in making decisions that balance the requirements for financial stability and quality of reported earnings by banks through optimal risk management and effective monitoring (Alharbi et al ., 2022). The board of directors’ efficiency in the banking industry is different than in other sectors due to the highly regulated and complex system in the sector, which requires high monitoring and counselling (Trinh et al ., 2020).…”

Section: Introductionmentioning

confidence: 99%

Internal governance mechanisms and information value of banks’ earnings

Elnahass,

Tahir,

Abdul Rahman Ahmed

et al. 2023

JAEE

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PurposeThis study examines the association between internal corporate governance mechanisms (i.e. board of directors and audit committee) and the information value of bank earnings. The authors comparatively assess this association across different bank types, Islamic versus conventional banks. The authors also investigate the mediating effect of Shariah governance.Design/methodology/approachThe authors utilize a unique and an international sample of 723 bank-year observations representing 100 listed banks from 16 countries during the period 2007–2015. The authors investigate the characteristics of the board of directors and audit committee (i.e. size and independence) and employ three core analyses for earnings informativeness (i.e. earnings persistence, cash flow predictability and reliability of loan loss provisions). Additional analyses address Shariah supervisory boards’ (SSBs’) size, financial expertise and multiple outside directorships. The authors use the random-effect Generalised Least Squares (GLS) estimation technique and provide several robustness checks and sensitivities.FindingsThe authors find that, on average, having large and independent boards (and audit committees) increases the informativeness of reported earnings for banks. Conditional on bank type, our results report strong evidence for differential effects across the two alternative banking systems. In Islamic banks, large and independent board of directors (and audit committees) is positively associated with all measures of information value. There is insignificant evidence for conventional banks. However, SSBs show no significant effect on the reported earnings’ informativeness.Originality/valueThis is the first study, to the best of our knowledge, that empirically and comparatively assesses the information value of reported earnings in association with effective internal governance while recognizing the institutional characteristics of different bank types. The authors offer new insights to policymakers, investors and other stakeholders located within countries operating on a dual banking system. The results could help regulators to improve their rules/guidance related to double-layer governance and financial reporting quality.

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Women directors and market valuation: What are the “Wonder Woman” attributes in banking?

Cited by 24 publications

References 140 publications

Women on Boards and Financial Performance of Malaysian Banks

Women on Boards and Financial Performance of Malaysian Banks

Female directors, the institutional environment and dividend policy: evidence from ASEAN-5 commercial banks

Internal governance mechanisms and information value of banks’ earnings

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