Gender Diversity and Women Empowerment Effects on Firms’ Financial Sustainability: Evidence from Developing Countries

The present study aims to investigate the influence of gender diversity on business financial sustainability. Financial sustainability has drawn academic attention in both the developed and developing worlds for several decades as a fundamental prerequisite for institutional longevity and long-term service. Despite progress in acknowledging women's impact in many aspects of life, society has yet to completely recognize women's position and influence in business. Little attention has been devoted, in particular, to the impact of gender diversity on financial sustainability of firms in developing countries. To address this gap, this study uses a sample of 8340 firms from 7 MENA countries from 2015 to 2021, World Bank Enterprise surveys, in order to examine whether firms’ gender diversity influences financial sustainability. Findings document that firms with Females’ Top Managers (FTMs) are financially less sustainable than their male-led counterparts. Results also indicate that the effect of female in top management on firm sustainability depends on firm size. Namely, the negative impact of FTMs on financial sustainability vanishes in larger firms. Finally, our findings emphasize the need of carefully matching business types and CEO traits. When hiring female business executives, managers need to keep in mind that the market-oriented matching process is impeded in countries where the government has a significant economic effect.