Parikalpana: KIIT Journal of Management

Open Access Open Access  Restricted Access Subscription Access

Board Composition, Board Gender Diversity and Firm Performance:Evidence from India


Affiliations
1 KIIT School of Management, KIIT University, Bhubaneswar, India
2 Dept. of Commerce, Utkal University, Bhubaneswar, India
 

Corporate governance is the burning topic of discussion all around the world amid the corporate frauds happened in the last two decades. For better corporate governance in firms, the board of directors collectively play a major role. Board composition matters a lot in the governance of the company because independent directors will not have any incentive to adhere to all the proposals of the management. Again worldwide it is also seen for the last couple of years, that board is increasingly represented by women directors. So the study has been made in that direction to find out the possible effect of board composition and gender diversity on the firm performance. Another dimension has also been studied here in this paper is to see the effect of the above two variables on firm performance in the presence of CEO duality(when CEO becomes the Chairman of the board) and in the absence of CEO duality. The study has been done taking NSE 200 companies, which represent 86% of total market capitalisation of NSE. After excluding the banking and financial companies and few companies for incomplete date the final data set is of 141 companies. A positive association has been observed in relation to firm performance.

Keywords

Corporate Governance, Board Composition, Board Gender Diversity, CEO Duality.
User
Notifications
Font Size

  • Adams, R. B. and Ferreira. D. (2009).Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309.

  • Anderson, C.A. and Anthony, R.N.(1986). The new corporate directors: John Wiley and Sons, New York.

  • Baysinger, B.D. & Hoskisson, R.E.(1990). The composition of boards of directors and strategic control: Effects on corporate strategy. The Academy of Management Review, 15(1), 72-87.

  • Bijalwan, J.G. & Madan, P.(2013). Board Composition, Ownership Structure and Firm Performance. Research Journal of Economics and Business Studies, 86- 101.

  • Boone, A.L., Field, L.C., Karpoff, J.M., and Raheja, C.G.(2007). The determinants of corporate board size and compositions: an empirical analysis. Journal of Financial Economics, 85(1), 66-101.

  • Boulouta I (2013). Hidden Connections: The Link Between Board Gender Diversity and Corporate Social Performance. Journal of Business Ethics, 113(2), 185-197.

  • Boyd, B.K.(1995). CEO duality and firm performance: A contingency model. Strategic Management Journal, 16, 301- 312.

  • Carter, D. A., D’Souza. F., Simkins. B. J., and Simpson. W.G.(2010). The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance. Corporate Governance: An International Review, 18(5), 396-414.

  • Certo, S.T.(2003). Influencing Initial Public Offering Investors With Prestige: Signalling With board Structures. Academy of Management Review, 28(3), 432-446.

  • Daily, C.M. & Dalton, D.R.(1994). Bankruptcy and corporate governance: The impact of board composition and structure. Academy of Management Journal, 37, 1603-1617.

  • Dimovski, W. and Brooks, R.(2006). The Gender Composition of Boards After IPO. Corporate Governance, 6(1), 11-17.

  • Dobbins. G. H. (1985). Effects of Gender on Leaders’ Responses to Poor Performers: An Attributional Interpretation.

  • The Academy of Management Journal, 28(3), 587-598.

  • Fama, E.F & Jensen, M.C.(1983). Separation of ownership and control. Journal of Law and Economics, 26, 301- 325.

  • Fields, M.A. and Keys, P.Y. (2003). The emergence of corporate governance from Wall St. to Main St.: Outside directors, board diversity, earnings management, and managerial incentives to bear risk. Financial Review, 38(1), 1-24.

  • Goyal, V.K. and Park, C.W.(2002). Board Leadership structure and CEO turnover. Journal of Corporate Finance, 8(1):49-66

  • Gul, F.A., Srinidhi, B. and Ng, A.C.(2011). Does board gender diversity improve the informativeness of stock prices? Journal of Accounting and Economics, 51(3), 314-338.

  • Hermalin, B. E & Weisback, M.S. (1988). The determinants of board composition. Rand Journal of Economics, 19, 589-606.

  • Hermalin, B.E. and Weisbach, M.S.(1991). The effect of board composition and direct incentives in firm performance. Financial Management, 14(5), 532-49.

  • Hillman, A.J., Shropshire, C. & Canella, A. A.(2007). Organizational predictors of women on corporate boards. Academy of Management Journal, 50(4), 941-952.

  • Jensen, M.C. & Mechling, W.H.(1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure, Journal of Financial Economics, 3, 305-317.

  • Jensen. M.C.(1983). Organization Theory and Methodology. The Accounting Review, 58(2), 319-339.

  • Kiel, G. and Nicholson, G.(2003). A framework for diagnosing board effectiveness. Corporate Governance: International Review, 12(4), 442-60.

  • Kota, H.M. and Tomar, C. (2010). Corporate governance practices of Indian firms. Journal of Management and Organization,16(2), 266-79.

  • Lam. & Lee.(2008). CEO duality and firm performance: Evidence from Hong Kong. Corporate Governance, 8(3), 299- 316.

  • Mace, M.L.(1986), Directors: Myth and Reality, Harvard Business School Press, Boston, MA.

  • Peng. M.W.(2004), Outside Directors and Firm Performance During Institutional Transactions. Strategic Management Journal, 25(5), 453-471.

  • Pfeffer, J. & Salancik, G.R. (1978). The external control of organizations: A resource dependence perspective. Stanford, C.A: Stanford Business Books.

  • Rechner, P.L. & Dalton, D.R.(1991). CEO duality and organizational performance: A longitudinal analysis. Strategic Management Journal, 12(2),155.

  • Shleifer, A. and Vishny, R.W.(1997). A survey of corporate governance. Journal of Financial Economics, 52(2), 737-83.

  • Shrader, C.B., Blackburn, V.B. and Iles, P.(1997). Women in management and firm financial performance: An exploratory study. Journal of Managerial Issues, 9(3), 355-372.

  • Siciliano, J.I.(1996). The relationship of board member diversity to organizational performance. Journal of Business Ethics, 15(12). 1313-1320

  • Smith. N., Smith. V. and Verner. M.,(2006). Do Women In Top Management Affect Firm Performance? A Panel Study of 2,500 Danish Firms. International Journal of Productivity and Performance Management, 55, 569-593.

  • Srinidhi. B.I.N., Gul. F. A. and Tsui. J. (2011). Female Directors and Earnings Quality. Contemporary Accounting Research, 28(5), 1610-1644.

  • Van der Walt. N.T. and Ingley. C.B.(2003). Board Configuration: building better boards. Corporate Governance, 3(4),5-17


Abstract Views: 519

PDF Views: 14




  • Board Composition, Board Gender Diversity and Firm Performance:Evidence from India

Abstract Views: 519  |  PDF Views: 14

Authors

Saroj Kumar Routray
KIIT School of Management, KIIT University, Bhubaneswar, India
Ranjan Kumar Bal
Dept. of Commerce, Utkal University, Bhubaneswar, India

Abstract


Corporate governance is the burning topic of discussion all around the world amid the corporate frauds happened in the last two decades. For better corporate governance in firms, the board of directors collectively play a major role. Board composition matters a lot in the governance of the company because independent directors will not have any incentive to adhere to all the proposals of the management. Again worldwide it is also seen for the last couple of years, that board is increasingly represented by women directors. So the study has been made in that direction to find out the possible effect of board composition and gender diversity on the firm performance. Another dimension has also been studied here in this paper is to see the effect of the above two variables on firm performance in the presence of CEO duality(when CEO becomes the Chairman of the board) and in the absence of CEO duality. The study has been done taking NSE 200 companies, which represent 86% of total market capitalisation of NSE. After excluding the banking and financial companies and few companies for incomplete date the final data set is of 141 companies. A positive association has been observed in relation to firm performance.

Keywords


Corporate Governance, Board Composition, Board Gender Diversity, CEO Duality.

References





DOI: https://doi.org/10.23862/kiit-parikalpana%2F2016%2Fv12%2Fi2%2F132988