Does Gender Diversity among the Board of Directors Significantly Affect a Company's Financial Performance?
DOI:
https://doi.org/10.32832/jm-uika.v15i1.15271Keywords:
Gender Diversity, Board of Director, Financial Performance, ManufacturingAbstract
In recent years, the issue of women's representation on corporate boards has gained considerable attention. The presence of women on boards is believed to enhance their effectiveness. This study aims to investigate whether the gender composition of corporate boards plays a crucial role in the financial performance of the manufacturing sector, which is a significant contributor to Indonesia's economic growth. Purposive sampling led to the selection of 85 companies that met the criteria, resulting in a total sample of 680 companies over an eight-year period. Gender diversity is assessed using the proportion of female directors, while financial performance is measured by Tobin's Q. Additionally, six control variables are included in this study, namely the board of commissioners, board size, firm size, leverage, age, and market value. The analytical data calculations were conducted using STATA 13 software to ensure more precise results. The results from the regression tests reveal a significant positive impact of gender diversity on financial performance, both with and without the control variables. Furthermore, these findings provide support for two prominent theories: agency theory and resource dependence theory.
References
Abbadi, S., Abuaddous, M., & Alwashah, A. (2021). Impact of board gender diversity on the financial performance of the manufacturing and service companies listed on the amman stock exchange. Corporate Governance and Organizational Behavior Review, 5(2), 8–16. https://doi.org/10.22495/cgobrv5i2p1
Al-Homaidi, E. A., Almaqtari, F. A., Ahmad, A., & Tabash, M. I. (2019). Impact of corporate governance mechanisms on financial performance of hotel companies: Empirical evidence from India. In African Journal of Hospitality, Tourism and Leisure (Vol. 8, Issue 2, pp. 1–21).
Alarussi, A. S., & Alhaderi, S. M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442–458. https://doi.org/10.1108/JES-05-2017-0124
Badan Pusat Statistik. (2023). Proporsi perempuan yang berada di posisi managerial menurut provinsi 2020-2022. Badan Pusat Statistik. https://www.bps.go.id/indicator/40/2003/1/tingkat-proporsi-perempuan-yang-berada-di-posisi-managerial-menurut-provinsi.html
Biduri, S., Maryanti, E., & Ahmed, E. R. (2023). Does Board Gender Diversity Affect Accounting Conservatism and Financial Performance? AKRUAL: Jurnal Akuntansi, 14(2), 203–218. https://doi.org/10.26740/jaj.v14n2.p203-218
Carmo, C., Alves, S., & Quaresma, B. (2022). Women on Boards in Portuguese Listed Companies: Does Gender Diversity Influence Financial Performance? Sustainability (Switzerland), 14(10), 1–21. https://doi.org/10.3390/su14106186
Chijoke-Mgbame, A. M., Boateng, A., & Mgbame, C. O. (2020). Board gender diversity, audit committee and financial performance: evidence from Nigeria. Accounting Forum, 44(3), 262–286. https://doi.org/10.1080/01559982.2020.1766280
Đặng, R., Houanti, L. H., Reddy, K., & Simioni, M. (2020). Does board gender diversity influence firm profitability? A control function approach. Economic Modelling, 90, 168–181. https://doi.org/10.1016/j.econmod.2020.05.009
Dankwano, R., & Hassan, Z. (2018). Impact of Gender Diversity on Indian Firm’s Financial Performance. International Journal of Management, Accounting and Economics, 5(5), 319–341.
Ditta, A. S., Payamta, & Setiawan, D. (2019). Board diversity and firm financial performance on consumer good industry in Indonesia. International Journal of Economics, Business and Management Research, 3(2), 155–181.
Duppati, G., Rao, N. V., Matlani, N., Scrimgeour, F., & Patnaik, D. (2020). Gender diversity and firm performance: evidence from India and Singapore. Applied Economics, 52(14), 1553–1565. https://doi.org/10.1080/00036846.2019.1676872
Fathonah, A. N. (2018). Pengaruh Gender Diversity dan Age Diversity Terhadap Kinerja Keuangan. Jurnal Riset Akuntansi Dan Keuangan, 6(3), 373–380.
Gordini, N. (2017). Management Research Review Article information : Gender diversity in the Italian boardroom and firm financial performan. Management Research Review, 40(1), 1–34.
Hastuti, R. T. (2018). Faktor Yang Mempengaruhi Firm Performance Pada Perusahaan Manfukaktur Yang Terdaftar Di Bei. Jurnal Muara Ilmu Ekonomi Dan Bisnis, 2(1), 181–187. https://doi.org/10.24912/jpa.v2i4.9355
Indonesia Business Coalition for Women Empowerment (IBCWE). (2022). Census on Women in Executive Leadership Team in IDX200 companies.
Innayah, M. N., & Pratama, B. C. (2021). Board Diversity and Its Effects on Firm Performance and Risk: A Study in Banking Firms. Journal of Accounting and Investment, 22(1), proofreading. https://doi.org/10.18196/jai.v22i1.10005
Jabari, H. N., & Muhamad, R. (2020). Gender diversity and financial performance of Islamic banks. Journal of Financial Reporting and Accounting, 19(3), 412–433. https://doi.org/10.1108/JFRA-03-2020-0061
Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1017/CBO9780511817410.023
Jhon, J. S., Sudjono, R. R., & Haryono, L. (2020). The Diversity of Board of Directors Characteristics and Firm Value: Analysis From Indonesian Public Companies. Journal of Applied Accounting and Taxation Article History, 5(2), 233–245.
Kementerian Perindustrian Republik Indonesia. (2023). Kontribusi Dominan dan Melonjak, Industri Manufaktur Masih Pede. https://www.kemenperin.go.id/artikel/24036/Kontribusi-Dominan-dan-Melonjak,-Industri-Manufaktur-Masih-Pede-
Kyere, M., & Ausloos, M. (2021). Corporate Governance and Firms Financial Performance in the United Kingdom. International Journal of Finance and Economics, 26(2), 1871–1885. https://doi.org/10.1002/ijfe.1883
Lagos Cortés, D., Betancourt Ramírez, J., & Gómez Betancourt, G. (2018). Relación entre gobierno corporativo, control familiar y desempeño en empresas colombianas. Innovar, 28(69), 85–98. https://doi.org/10.15446/innovar.v28n69.71698
Lee-Kuen, I. Y., Sok-Gee, C., & Zainudin, R. (2017). Gender diversity and firms’ financial performance in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 13(1), 41–62. https://doi.org/10.21315/aamjaf2017.13.1.2
Murhadi, W. R., Azaria, D., & Silvia Sutedjo, B. (2021). Board Diversity and Financial Performance in Indonesia. Journal of Entrepreneurship & Business, 2(2), 86–95. https://doi.org/10.24123/jeb.v2i2.4537
Musa, B., Jerry, M. S., & Abdulrasheed, A. (2020). Effect of Board of Directors Gender Diversity on Financial Performance of Deposit Money Banks in Nigeria. Global Journal of Applied, Management and Social Sciences (GOJAMSS);, 18(January), 9–19.
Ngo, M. T., Pham, T. H. Van, & Luu, T. T. T. (2019). Effect of board diversity on financial performance of the Vietnamese listed firms. Asian Economic and Financial Review, 9(7), 743–751. https://doi.org/10.18488/journal.aefr.2019.97.743.751
Nguyen, T. H. H., Ntim, C. G., & Malagila, J. K. (2020). Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda. International Review of Financial Analysis, 71(December 2019), 101554. https://doi.org/10.1016/j.irfa.2020.101554
Ntim, C. G., Lindop, S., Osei, K. A., & Thomas, D. A. (2015). Executive compensation, corporate governance and corporate performance: A simultaneous equation approach. Managerial and Decision Economics, 36(2), 67–96. https://doi.org/10.1002/mde.2653
Palaniappan, G. (2017). Determinants of corporate financial performance relating to board characteristics of corporate governance in Indian manufacturing industry: An empirical study. European Journal of Management and Business Economics, 26(1), 67–85. https://doi.org/10.1108/EJMBE-07-2017-005
Pasaribu, P., Masripah, M., & Mindosa, B. (2019). Does Gender Diversity in the Boardroom Improve Firm Performance? Evidence from Indonesia. Economics and Finance in Indonesia, 65(1), 1. https://doi.org/10.47291/efi.v65i1.597
Pfeffer, J., & Salancik, G. (1978). The External Control of Organizations: A Resource Dependence Perspective. The University of Chicago Press.
Raharjanti, R. (2019). Gender Diversity, Struktur Kepemilikan, dan Perbankan di Indonesia. Jurnal Aktual Akuntansi Keuangan Bisnis Terapan, 2(2), 133–142.
Reddy, S., & Jadhav, A. M. (2019). Gender diversity in boardrooms–A literature review. Cogent Economics and Finance, 7(1). https://doi.org/10.1080/23322039.2019.1644703
Santosa, P. W., Budiantoro, H., & Zuzryn, A. S. (2022). The Moderating Role Of Firm Size On Relationship Between Majority Ownership And Debt Policy Of Property Sector. Jurnal Manajemen, 26(2), 315–330. https://doi.org/10.24912/jm.v26i2.932
Septiana, S., Robin, R., & Yulfiswandi, Y. (2022). Female Board Independency in Corporate Governance and Firm Performance Students. Jurnal Organisasi Dan Manajemen, 18(2), 14–25. https://doi.org/10.33830/jom.v18i2.3278.2022
Suherman, Ramadhania, M., Ahmad, G. N., Zakaria, A., & Witiastuti, R. S. (2021). The Effect of Gender Diversity and the Business Expertise of Female Directors on Firm Performance: Evidence from the Indonesia Stock Exchange. International Journal of Business, 26(3), 38–52.
Tania, K. S., & Hesniati, H. (2022). The effect of gender diversity on firm performance in Indonesia. Jurnal Manajemen Strategi Dan Aplikasi Bisnis, 5(2), 267–284. https://doi.org/10.36407/jmsab.v5i2.667
Usman, M., & Kibiya, I. U. (2021). Board Diversity and Financial Performance of Islamic Banks in Malaysia. Gusau Journal of Accounting and Finance, 2(3), 1–16.
Utami, A. D., & Risfandy, T. (2023). Gender Diversity and Firm Performance – An Empirical Approach. Strategic Management & Entrepreneurship Towards the New Normal Era, 1(March).
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Jurnal Manajemen (Edisi Elektronik)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
