Board gender diversity and the timing of CEO stock option awards

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Moncef Guizani ◽  
Ahdi Noomen Ajmi
Keyword(s):  
Stock Price ◽  
Gender Diversity ◽  
Chief Executive ◽  
Stock Option ◽  
Content Type ◽  
Instrumental Variable Analysis ◽  
Compensation Committee ◽  
Female Directors ◽  
Research Findings ◽  
Board Gender Diversity

Purpose This study aims to explore the role of board gender diversity in mitigating chief executive officer (CEO) luck. CEOs are “lucky” when they receive stock option grants on days when the stock price is the lowest in the month of the grant, implying opportunistic timing. Design/methodology/approach This study uses a logistic regression analysis and an instrumental-variable analysis. The sample consists of 3,249 firm-year observations from 2010 through 2015. Findings The results show that female directors significantly deter the opportunistic timing of option grants. This study finds that gender diversity – as measured by the percentage of women on the board, the percentage of female independent directors and the percentage of female directors on the compensation committee are likely to reduce the odds that CEOs receive opportunistically timed lucky grants. The results are consistent with those in prior research that documents the benefits of board gender diversity. Practical implications The research findings are beneficial to policymakers and regulators, as it allows them to assess the importance of diversity on boards in the monitoring of the managers, particularly as it pertains to the design of CEO compensation packages. Furthermore, these findings have implications for Ibero-American countries as they shed light on the importance to undertake measures and reforms to promote board effectiveness by the introduction of gender diversity. Originality/value While prior research has examined the effect of board gender diversity on firm performance, the study is the first to investigate the effect of female directors on the opportunistic timing of option grants, using a rigorous empirical framework that explicitly accounts for endogeneity.

scholarly journals Does gender diversity on the board reduce agency cost? Evidence from Pakistan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ali Amin ◽  
Ramiz Ur Rehman ◽  
Rizwan Ali ◽  
Collins G. Ntim
Keyword(s):  
Gender Diversity ◽  
Business Environment ◽  
Agency Cost ◽  
Agency Conflicts ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
Female Directors ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to examine the effects of board gender diversity on agency costs in non-financial firms listed on the Pakistan Stock Exchange (PSX). Design/methodology/approach Multiple regression analysis is used to determine the impact of board gender diversity on agency cost. The research used panel data consisting of 2,062 firm-year observations of 226 non-financial firms listed on the PSX from 2008 to 2019 to test the proposed hypothesis. In addition, the Blau and the Shannon indices were used to checking for robustness. Findings The results indicate that female presence on the board significantly reduces the agency cost and, hence, mitigates the principal-agent conflict. Moreover, consistent with the critical mass theory, it was found that boards with three or more female directors have a stronger impact on reducing the agency cost, as compared to two or fewer female directors on the board. Research limitations/implications The sample was restricted to non-financial firms listed on the PSX only; therefore, the results reflect the attributes of Pakistan’s business environment. A similar analysis in the context of other countries may generate different results. Practical implications The findings imply that female directors play an important role in reducing agency conflicts between shareholders and managers by enhancing monitoring through effective governance mechanisms. The policymakers, therefore, should focus on female career development and encourage professional training programmes to generate a fair, competitive environment for senior female management. Originality/value This study attempts to fill the literature gap in that no similar study covers the non-financial firms’ listed firms in Pakistan. The paper supports the reforms made by the code of corporate governance by making the placement of female directors mandatory on Pakistani corporate boards. Overall, support is provided for the view that regulators should favour gender quotas regarding the composition of the board management team of listed firms to reduce agency conflicts and gain shareholder confidence.

Corporate governance and the quality of CSR disclosure: lessons from an emerging economy

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Husam Ananzeh
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Gender Diversity ◽  
Negative Relationship ◽  
Chief Executive ◽  
Board Members ◽  
Board Diversity ◽  
Content Type ◽  
Female Directors

Purpose This paper is motivated by the absence of rules that govern the practice of corporate social responsibility disclosure (CSRD). The purpose of this paper is to investigate the corporate governance factors that impact the quality of CSRD. This study further examines the moderating role of family ownership and educational qualifications of female directors on the relation between board gender diversity and CSRD quality. Design/methodology/approach This study adopts a sample of 94 non-financial companies listed on the Amman Stock Exchange to collect data on CSRD based on a checklist of 41 items for seven years from 2010–2016. The quality of CSRD is measured using a four-dimensional method that encompasses relative quantity, disclosure intensity, degree of accuracy and management outlook. Findings This study finds that CSRD quality is far from satisfactory in Jordan. The results also suggest that board size, auditor type, company size and profitability are positively associated with CSRD quality. On the other hand, factors such as chief executive officer duality, board diversity, ownership concentration and financial leverage are negatively associated with CSRD quality. In addition, the results of the empirical analysis suggest that the negative relationship between the quality of CSRD and the presence of female board members is stronger for family-owned companies. By contrast, the negative relationship between the quality of CSRD and the presence of female board members is weakened when the company has more educated, skilled and qualified female directors. Originality/value The originality of this study is manifested in the development of a quantitative measurement of CSRD quality.

Female directors and agency costs: evidence from Chinese listed firms

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qurat Ul Ain ◽  
Xianghui Yuan ◽  
Hafiz Mustansar Javaid ◽  
Muhammad Usman ◽  
Muhammad Haris
Keyword(s):  
Agency Costs ◽  
Conflicts Of Interest ◽  
Critical Mass ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Listed Firms ◽  
Female Directors ◽  
Wide Range ◽  
Board Gender Diversity

PurposeThe purpose of this research is to examine whether board gender diversity reduces the agency costs of firms in the context of Chinese listed firms.Design/methodology/approachThis paper uses a large sample of 23,340 firm-year observations of Chinese listed companies during 2004–2017. The authors use ordinary least squares regressions as the primary methodology with a wide range of methods to control for endogeneity and to check robustness, including the fixed-effect method, instrumental variable approach, lagged gender diversity measures, propensity score matching, Blau index, Shannon index and industry-adjusted measures of agency costs.FindingsThe evidence reveals that the participation of female directors in corporate board reduces agency costs, which correlates with conflicts of interest. Moreover, gender-diverse boards are more effective in state-owned enterprises (SOEs), in which agency issues are more severe. Female directors also provide better monitoring roles in more-developed areas. Finally, corporate boards that have a critical mass of female directors have a greater tendency to reduce agency costs as compared to their token participation. Overall, all findings support the validity of agency theory.Practical implicationsThis study shows the economic benefit of female directors in the boardroom by reducing agency costs and by improving firms' governance structure. Regarding the government, which is gradually introducing board gender diversity policies, this study provides valuable pragmatic information for Chinese regulators on this issue.Originality/valueThis study extends the literature by providing evidence that gender diversity in boardroom matters for shareholders' wealth maximization. It provides novel evidence that a critical mass of female directors is more effective in reducing agency costs compared to a single female on the board, and that the effect of gender diversity varies in relation to ownership structure and region.

scholarly journals The association between board gender diversity and financial reporting quality, corporate performance and corporate social responsibility disclosure

2018 ◽  
Vol 31 (1) ◽  
pp. 177-194 ◽  
Author(s):  
María Consuelo Pucheta-Martínez ◽  
Inmaculada Bel-Oms ◽  
Gustau Olcina-Sempere
Keyword(s):  
Firm Performance ◽  
Financial Reporting ◽  
Gender Diversity ◽  
Reporting Quality ◽  
Content Type ◽  
Csr Reporting ◽  
Female Directors ◽  
Csr Disclosure ◽  
Board Gender Diversity ◽  
Corporate Social

Purpose Companies, politicians, the mass media, legislators, scholars and society in general have shown a growing interest in how board gender diversity affects a firm’s decisions. This concept has been developed because some nations have introduced voluntary policies to regulate and increase the proportion of female directors on corporate boards. Thus, the purpose of this paper is to review previous research based on board gender diversity as a corporate governance mechanism and its effect on some firms’ business decisions: financial reporting quality (FRQ), firm performance and corporate social responsibility (CSR) reporting. Design/methodology/approach The authors focus on the agency and stakeholder theory to examine the link between female directors on boards and FRQ, CSR disclosure and firm performance. Findings This review provides researchers a structure that can identify the benefits and disadvantages of including female directors on boards regarding three particular corporate outcomes (FRQ, firm performance and CSR reporting). Originality/value This study provides a review of past literature on firm performance, CSR disclosure and FRQ from 1975 to 2017, and it contributes to past research by giving a broad overview of the main results of the association between female board directors and corporate decisions. The findings have implications for governments, academics and company managers.

Board gender diversity and firms' internationalization speed: the role of female directors' characteristics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ge Ren ◽  
Ping Zeng
Keyword(s):  
Gender Diversity ◽  
Schema Theory ◽  
Manufacturing Firms ◽  
Economic Consequences ◽  
Content Type ◽  
Upper Echelons Theory ◽  
Female Directors ◽  
Internationalization Speed ◽  
Board Gender Diversity ◽  
The Impact

PurposeDrawing on the gender self-schema theory, upper echelons theory and the literature on international business, this study aims to examine the impact of board gender diversity on firms' internationalization speed.Design/methodology/approachIn this study, secondary data of 886 listed Chinese manufacturing firms from 2009 to 2018 are studied using the ordinary least squares regression model as the baseline method, an instrumental variable method is adopted for endogeneity control and both fixed and random effect models are adopted for the robustness test.FindingsBoard gender diversity reduces firms' internationalization speed, and the negative effect between board gender diversity and internationalization speed is stronger when the average age of female directors is older and weaker when female directors have international experience or financial background.Practical implicationsFirst, Chinese firms need to increase or decrease board gender diversity to match the board to firms' internationalization strategy. Increasing board gender diversity may be a more appropriate choice for firms that are expanding rapidly internationally, and vice versa. Second, when introducing female directors to international firms, it is essential to address other characteristics of these directors beyond their gender.Originality/valueFirst, the authors contribute to the literature on board gender diversity using Chinese manufacturing firms as our research sample, which provides new insights into the economic consequences of increasing the number of female directors. Second, this research contributes to the literature on firms' internationalization speed. Third, the authors capture in more detail the economic consequences of increasing board gender diversity in the context of China.

scholarly journals Board gender diversity, corporate governance and bank efficiency in Ghana: a two stage data envelope analysis (DEA) approach

2019 ◽  
Vol 19 (2) ◽  
pp. 299-320 ◽  
Author(s):  
David Adeabah ◽  
Agyapomaa Gyeke-Dako ◽  
Charles Andoh
Keyword(s):  
Gender Diversity ◽  
Chief Executive ◽  
Threshold Effect ◽  
Governance Structure ◽  
Annual Reports ◽  
Future Research ◽  
Bank Efficiency ◽  
Data Set ◽  
Content Type ◽  
Board Gender Diversity

PurposeThis study aims to analyze the efficiency of banks under board gender diversity and to examine the determinants of bank efficiency.Design/methodology/approachData for analysis were sourced from annual reports of 21 banks for the period from 2009 to 2017. A two-step framework was used: first, an examination of efficiency scores with and without board gender diversity computed using data envelopment analysis; and second, a regression of board gender diversity as a determinant of bank efficiency using panel estimation on an unbalanced panel data.FindingsThe results reveal that gender diversity promotes bank efficiency up to a maximum of two female directors on a nine-member board of directors, suggesting a threshold effect on bank efficiency. Board size improves bank efficiency. Board independence is negatively related to bank efficiency. Also, powerful chief executive officers are detrimental for bank efficiency. Finally, the authors find that ownership structure, bank size, bank age and loan-to-deposit ratio are important factors affecting bank efficiency.Research limitations/implicationsAll bank-year observations with no female representation on the board were excluded. As such, this paper is limited to 21 banks. Future research should look at a larger data set and account for dynamic endogeneity.Practical implicationsThe paper contributes to bank governance structure, namely, gender composition of boards, and provides an insight for regulators and shareholders to estimate the role of men and women on boards.Originality/valueThe novel feature of the efficiency model used is that it incorporates board gender diversity as an additional input variable, in line with the preposition of proponent of resource dependency theory.

Women directors’ effect on firm value and performance: the case of REITs

2020 ◽  
Vol 20 (7) ◽  
pp. 1265-1279
Author(s):  
Magdy Noguera
Keyword(s):  
Firm Value ◽  
Critical Mass ◽  
Gender Diversity ◽  
Chief Executive ◽  
Women Directors ◽  
Content Type ◽  
Board Of Director ◽  
Sarbanes Oxley ◽  
And Performance ◽  
Board Gender Diversity

Purpose The purpose of this paper is to assess the effect of women directors on US Real Estate Investment Trusts (REITs) value and performance. Design/methodology/approach Archival financial and board of director data for the 1999–2019 period are collected and analyzed using panel data regression analysis. Findings The main findings indicate that women directors’ presence renders a modest positive effect on REIT performance but only when they reach critical mass on REIT boards; and that women directors have no effect at all on REIT value. Additional findings indicate that women directors are more common on REIT boards after the enactment of the Sarbanes–Oxley Act but less common on boards in which the REIT founder is the chief executive officer. Originality/value To the best of the author’s knowledge, this is the first research on the effect of a gender diverse board on REIT value. It is also the first paper documenting a positive relationship between board gender diversity and REIT performance. This paper fills a research gap, as it is one of the few papers focused on gender diversity within the REITs board composition literature.

Ownership structure, board gender diversity and charitable donation

2018 ◽  
Vol 18 (4) ◽  
pp. 655-670 ◽  
Author(s):  
Ting-Ling Lin ◽  
Heng-Yih Liu ◽  
Chi-Jui Huang ◽  
Yu-Chiung Chen
Keyword(s):  
Ownership Structure ◽  
Critical Mass ◽  
Linear Regression Analysis ◽  
Gender Diversity ◽  
Charitable Donation ◽  
Content Type ◽  
Charitable Donations ◽  
Female Directors ◽  
Corporate Investors ◽  
Board Gender Diversity

Purpose This paper aims to examine the effect of ownership structure and board gender diversity on charitable donations for a group of listed electronics companies in Taiwan. Design/methodology/approach Using linear regression analysis, this paper analyses the ownership structure, board gender diversity and charitable donations of 380 Taiwanese electronics companies (2011-2013). Findings While domestic institutional investors, such as domestic mutual funds and corporate investors, take more of agency logic view, it negatively impacts on charitable donations. However, the empirical findings of this paper indicate that board gender diversity with the critical number of female directors was positively related to charitable donation. Thus, it is clear that female directors reaching critical numbers were taking more of a stakeholder view of institutional logic, emphasizing the balance of interests of internal and external stakeholders. Research limitations/implications This paper is limited to selected Taiwanese electronics companies over a two-year time frame, and charitable donations are the only proxy of corporate social responsibility (CSR) activity. The paper suggests that, as predicted by stakeholder theory and critical mass theory, companies with boards composed of at least three female directors make higher charitable donations. Practical implications This paper indicates that female directors on the board should have more voices on the board regarding the necessity and importance of CSR. Originality/value The paper contributes to existing literature by looking into the effects of ownership structure and board gender diversity on charitable donations.

Calling out the laggards: shareholder activism and board gender diversity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
John P. Berns ◽  
Jaime L. Williams
Keyword(s):  
Gender Diversity ◽  
Chief Executive ◽  
Shareholder Activism ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Leadership Positions ◽  
Content Type ◽  
Shareholder Proposals ◽  
The Usa ◽  
Board Gender Diversity

Purpose While the presence of women in the boardroom has been steadily increasing, shareholders have taken action to push firms which lag in this area to add women to their boards. The purpose of this study is to examine whether firms with more gender homogenous (i.e. male-dominated) boards are disproportionately targeted with shareholder proposals calling for increased board gender diversity, how gender diversity among other firm leadership moderates this relationship, and whether firms respond. Design/methodology/approach Firth logistic regression is used to analyze the rare occurrence of a shareholder proposal within a sample of 7,226 firm year observations from S&P 1,500 firms in the USA between 2010 and 2017. Ordinary least squares regression is used to examine the subsequent three-year change in board gender diversity using a sample of 3,917 firm year observations. Findings The empirical findings indicate that firms with gender homogenous boards are more likely to incur shareholder proposals aimed at increasing board gender diversity. Having women in leadership positions (e.g. as the Chief Executive Officer) weakens this relationship. Finally, despite most proposals failing to pass, board gender diversity dramatically increases following the rendering of a proposal. Originality/value This study adds to the understanding of the principal-agent relationship, offering novel insights into shareholder responses to the lack of gender diversity among the board and firm responses to such activism. Furthermore, the authors add to the understanding of expectation violations with regard to gender diversity within firm boards. Finally, the authors find that women in other leadership positions insulate the firm from such shareholder activism – an important boundary condition of the findings.

scholarly journals Does board gender diversity weaken or strengthen executive risk-taking incentives?

PLoS ONE ◽  
2021 ◽  
Vol 16 (10) ◽  
pp. e0258163
Author(s):  
Pattanaporn Chatjuthamard ◽  
Pornsit Jiraporn ◽  
Sang Mook Lee
Keyword(s):  
Risk Aversion ◽  
Risk Taking ◽  
Instrumental Variable ◽  
Gender Diversity ◽  
Optimal Level ◽  
Instrumental Variable Analysis ◽  
Female Directors ◽  
Managerial Risk ◽  
Board Gender Diversity ◽  
Variable Analysis

We investigate the effect of board gender diversity on managerial risk-taking incentives. Our results demonstrate that companies with stronger board gender diversity provide more powerful executive risk-taking incentives. It appears that female directors’ risk aversion exacerbates managers’ risk aversion, resulting in a sub-optimal level of risk-taking. To offset this tendency for too little risk, companies are induced to provide stronger risk-taking incentives. Specifically, an increase in board gender diversity by one standard deviation raises vega by 10.3%. Further analysis corroborates the results, including propensity score matching, entropy balancing, and an instrumental-variable analysis. Endogeneity appears to be unlikely, suggesting that female directors are not merely associated with, but probably bring about stronger risk-taking incentives.

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