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Female board participation and firm’s financial performance: a panel study from a Latin American economy

Female board participation and firm’s financial performance: a panel study from a Latin American... This study aims to elucidate the relationship between women's participation on the board of directors and the company's financial performance in a sample of 45 Colombian companies listed on the Colombia Stock Exchange (CSE) (Bolsa de Valores de Colombia).Design/methodology/approachUsing 50,214 financial records of 45 companies listed on the CSE during 2008–2016, the authors performed panel data regressions to explore the relationship between the measures of gender diversity on boards and the impact on corporate financial performance.FindingsThe authors show that the participation and presence of at least one woman on the board of directors are positively associated with firm financial performance as measured by return on equity (ROE), but not as measured by Tobin’s Q. This second indicator is positively associated with firm financial performance when there are at least three female directors on boards of 10 or more individuals.Practical implicationsThe findings also provide evidence supporting the development of managerial and organizational mechanisms that strengthen female presence at the highest level of governance.Originality/valueThe study demonstrates that female presence on boards has a positive impact on firms’ financial performance, but the degree of diversity impacts differently ROE and Tobin’s Q. These findings are based on a study of an emerging economy in Latin America, and data on similar economies are scarce. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

Female board participation and firm’s financial performance: a panel study from a Latin American economy

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References (85)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1472-0701
DOI
10.1108/cg-07-2019-0235
Publisher site
See Article on Publisher Site

Abstract

This study aims to elucidate the relationship between women's participation on the board of directors and the company's financial performance in a sample of 45 Colombian companies listed on the Colombia Stock Exchange (CSE) (Bolsa de Valores de Colombia).Design/methodology/approachUsing 50,214 financial records of 45 companies listed on the CSE during 2008–2016, the authors performed panel data regressions to explore the relationship between the measures of gender diversity on boards and the impact on corporate financial performance.FindingsThe authors show that the participation and presence of at least one woman on the board of directors are positively associated with firm financial performance as measured by return on equity (ROE), but not as measured by Tobin’s Q. This second indicator is positively associated with firm financial performance when there are at least three female directors on boards of 10 or more individuals.Practical implicationsThe findings also provide evidence supporting the development of managerial and organizational mechanisms that strengthen female presence at the highest level of governance.Originality/valueThe study demonstrates that female presence on boards has a positive impact on firms’ financial performance, but the degree of diversity impacts differently ROE and Tobin’s Q. These findings are based on a study of an emerging economy in Latin America, and data on similar economies are scarce.

Journal

Corporate GovernanceEmerald Publishing

Published: Jul 28, 2021

Keywords: Latin America; Financial performance; Board of directors; Gender diversity; Degree of diversity

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