Board committees and financial performance: exploring the effects of gender diversity in the emerging economy of India
International Journal of Emerging Markets
ISSN: 1746-8809
Article publication date: 13 October 2022
Issue publication date: 31 May 2024
Abstract
Purpose
This study aims to highlight the impact of introducing women directors to board committees, thereby empowering them to contribute to decision-making, and as a result, influence firms’ financial performance in an emerging economy.
Design/methodology/approach
This study uses a fixed-effects panel data regression model to test the impact of gender diversity on corporate boards as well as board committees on firms’ financial performance. Two widely used diversity measures, the Blau index and the Shannon index, have been used to enhance the robustness of the results.
Findings
The findings suggest that gender diversity on prominent board committees (remuneration committee and nomination committee) positively affects firms’ financial performance when measured by the market-based performance measure, but it is insignificant when measured through accounting-based performance indicator. Furthermore, the benefits of gender diversity accrue to the firms only when women are part of prominent committees and are engaged in governance mechanisms, rather than just being appointed on corporate boards as a means of tokenism.
Originality/value
This study is among the first to investigate the relationship between gender diversity and financial performance through the lens of committee assignments. Moreover, the unique cultural and institutional setting offered by India, which is an emerging economy, provides a fertile ground for understanding the role of women leaders in the workforce.
Keywords
Citation
Singhania, S., Singh, J. and Aggrawal, D. (2024), "Board committees and financial performance: exploring the effects of gender diversity in the emerging economy of India", International Journal of Emerging Markets, Vol. 19 No. 6, pp. 1626-1644. https://doi.org/10.1108/IJOEM-03-2022-0491
Publisher
:Emerald Publishing Limited
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