Effect of Board Diversity on Financial Performance of Quoted Natural Resources Firms in Nigeria

2018 ◽  
Author(s):  
Nestor Amahalu
Keyword(s):  
Natural Resources ◽  
Financial Performance ◽  
Board Diversity

scholarly journals Board diversity and financial performance: A graphical time-series approach

2015 ◽  
Vol 18 (3) ◽  
pp. 425-448 ◽  
Author(s):  
Cobus CH Taljaard ◽  
Michael JD Ward ◽  
Chris J Muller
Keyword(s):  
Time Series ◽  
Human Capital ◽  
Financial Performance ◽  
Demographic Data ◽  
Gender Diversity ◽  
Fiduciary Duty ◽  
Share Price ◽  
Theoretical Frameworks ◽  
Data Set ◽  
Board Diversity

Directors need to guide and govern companies on behalf of and for the benefit of shareholders and stakeholders. However questions remain as to whether boards with higher levels of diversity amongst directors are better equipped to fulfil their fiduciary duty than boards with lower levels of diversity. This research examines whether increased levels of diversity within boards are associated with improved financial performance to shareholders. From the literature, several theoretical frameworks that could explain why increased diversity might or might not lead to improved board performance were noted. Share returns and directors’ demographic data were collected for a sample of the largest 40 companies listed on the JSE from 2000 to 2013. This data was analysed using Muller and Ward’s (2013) investment style engine by forming portfolios of companies based on board-diversity constructs. Time-series graphs of cumulative portfolio market returns were analysed to determine if the diversity dimensions tested were associated with improved share performance. The results show that racial diversity within boards is not associated with financial performance. However, increased gender diversity and younger average board age are shown to have strong associations with improved share price performance. These findings are mainly attributed to agency-, resource dependency, human capital and signalling theories. Increased diversity is seen to bolster independence and lessen agency problems. Rising diversity levels also enlarge boards’ external networks, allowing diverse stakeholders’ needs to be accommodated and limiting dependence on strategic resources. Finally, as human capital is increased, the collection of different skills and experiences are associated with better performance. The results, based on a more robust methodology and improved data set, provide additional support to previous studies.

scholarly journals Corporate Board Diversity and Financial Performance: The Nigerian Insurance Sector’s Perspective

Growth ◽  
2020 ◽  
Vol 7 (1) ◽  
pp. 20-25
Author(s):  
Gbarato, Ledum Moses
Keyword(s):  
Financial Performance ◽  
Gender Diversity ◽  
Negative Influence ◽  
Least Square ◽  
Insurance Companies ◽  
Board Members ◽  
Board Composition ◽  
Corporate Board ◽  
Board Size ◽  
Board Diversity

The presence of appropriate gender diversity, board size and board composition does not only promote favourable organizational ambience but also offers meaningful upsurge in the financial position of an organization relatively. It is on this premise that prompted the essence to examine the relationship between corporate board diversity and financial performance of insurance companies in Nigeria for the period 2014 to 2018. Secondary data from Cornerstone Insurance Plc. and Lasaco Assurance Plc. were employed in the study. Using the Panel least Square regression technique, the results reveal that gender diversity, board size and board composition exert insignificant influence on profit before tax as the measure of financial performance. However, while gender diversity exerts negative influence, board size and board composition exert positive influences on profit before tax of insurance companies. The study concludes that employment of appropriate number of directors and also in suitable composition as board members have positive effect on the financial performance of insurance firms. Therefore, the study recommended among others, that: appropriate ratio of executive to independent non-executive directors should be maintained among board members for better decision-making at the interest of all stakeholders. Also, the ratio of gender diversity (female to male directors) should be increased as the role of women in resource management cannot be relegated to the background especially in financial performance of insurance companies.

Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance

2019 ◽  
Vol 12 (2) ◽  
pp. 169-186
Author(s):  
Nailesh Limbasiya ◽  
Hitesh Shukla
Keyword(s):  
Financial Performance ◽  
Negative Relationship ◽  
Mediation Effect ◽  
Independent Directors ◽  
Hierarchical Regression ◽  
Board Diversity ◽  
Return On Equity ◽  
Net Worth ◽  
Multiple Directorships ◽  
Age Diversity

Purpose: This article analyses the effect of board diversity on the financial performance of non-financial firms listed in the Nifty Index. Specifically, it examines the mediation effect of the promoter’s presence and multiple directorships on the financial performance of the firm, that is, return on net worth (RONW), return on equity (ROE) and its sales growth. Methodology: The article uses the hierarchical regression model to analyse the effect of board diversity on financial performance. The presence of the promoters on the board and multiple directorships are taken as the control variables. Findings: Empirical results show the significant effect of the promoter’s presence on the board on the firm’s earnings and a significant positive effect of firm age, board size, age diversity and experience diversity on the financial performance. However, we do not find any statistically significant relationship between firm size and financial performance in any model. The results also show that the age and experience of the female directors are significantly less compared to the male directors. However, the age and experience of the non-executive directors and independent directors are found to be higher among the other positions held by the directors. We also find a negative relationship between multiple directorships in other firms and the financial performance of the firm. Value: The article proposes that there should be a greater number of independent directors in a firm that has its promoter on the board. One recommendation for the board is to reduce the number of directorships held in other boards to ensure more constructive contribution towards the firm’s financial performance. The article studies the effect of the promoter’s presence on the board and multiple directorships held by board members on the financial performance of the firm.

scholarly journals Does Board Diversity Influence Financial Performance?

2018 ◽  
Vol 11 (3) ◽  
pp. 195-215 ◽  
Author(s):  
Josua Tarigan ◽  
◽  
Christoforus Hervindra ◽  
Saarce Elsye Hatane ◽  
◽  
...  
Keyword(s):  
Financial Performance ◽  
Board Diversity

scholarly journals The Impact of Board Diversity, CEO Characteristics, and Board Committees on Financial Performance in the Case of Romanian Companies

2021 ◽  
Vol 15 (1) ◽  
pp. 7
Author(s):  
Bogdan Aurelian Mihail ◽  
Dalina Dumitrescu ◽  
Carmen Daniela Micu ◽  
Adriana Lobda
Keyword(s):  
Financial Performance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Board Members ◽  
Board Diversity ◽  
Board Committees ◽  
Positive Effects ◽  
Governance Practices ◽  
The Impact ◽  
Ceo Characteristics

This paper examines the impact of board diversity, CEO characteristics, and board committees on the financial performance of the companies listed on the Bucharest Stock Exchange (BSE). In order to test the influence of these characteristics, detailed data on more than 70 firms are collected by hand, for the 2016–2020 period, and comprehensive regression models are estimated. The findings show that there are positive effects of board diversity especially with regard to the independent board members. In terms of the board committees, the audit committee is found to have a favourable influence. The regression coefficients imply that a 10% increase in the share of independent board members would be associated with a 0.93% increase in ROE. Based on these findings, it can be argued that improving the corporate governance practices of the companies listed on the BSE would increase the performance and the value of these firms.

scholarly journals How does board diversity impact a company’s financial performance? A preliminary literature review

2021 ◽  
Vol 3 (2) ◽  
pp. 01-09
Author(s):  
Esra Findik
Keyword(s):  
Literature Review ◽  
Financial Performance ◽  
Current Literature ◽  
Female Representation ◽  
Policy Changes ◽  
Board Diversity ◽  
Preliminary Research

Countries’ policy changes on improvement of female representation in board is in the spotlight of many researchers. In this paper studies current literature in board diversity, not specifically in gender but also ethnic, educational and cultural diversities, has been examined through their methodologies and findings. This study provides a summary of empirical findings of necessary papers in this field and try to assist researchers who are interested in this issue during their preliminary research.

Financial performance and risk behavior of gender-diversified boards in the Chinese automotive industry

2017 ◽  
Vol 46 (4) ◽  
pp. 847-866 ◽  
Author(s):  
Sven Horak ◽  
Jingjing Cui
Keyword(s):  
Financial Performance ◽  
Risk Behavior ◽  
Automotive Industry ◽  
Chinese Government ◽  
Corporate Boards ◽  
Corporate Board ◽  
Board Diversity ◽  
Content Type ◽  
Return On Equity ◽  
Women's Participation

Purpose Recent legislation in Europe and North America encourages women’s participation in corporate boards based on the belief that gender-diversified boards contribute positively to firm performance and increased competitiveness. Contrary to the West, the women’s participation rate in business has been traditionally high in China. The purpose of this paper is to find out whether gender-diverse corporate boards of Chinese automotive firms perform better financially than gender-homogeneous boards. Design/methodology/approach By drawing on data from the Chinese Government and Bloomberg, the authors compare and analyze the differences in financial performance (return on equity, asset growth, sales growth) and risk behavior (debt risk, R&D expenditure) of Chinese automotive firms with and without women on their corporate board. Findings There is significant evidence that firms with women on the board perform better across all three categories, with the exception of return on equity, for which they found no significant differences among the analyzed firms. Practical implications While women’s participation in corporate boards in China is low, the results of this study suggest to policy makers and firms alike to implement measures that support gender-diversified boards in order to take advantage of their potential to increase corporate performance. Originality/value So far, the performance of corporate boards of countries with a traditionally high share of female participation in the workforce has rarely been analyzed. Research focusing on the Chinese automotive industry is new and underrepresented, although China is the largest automotive market worldwide and a key industry of the domestic economy. This investigation contributes to the literature stream on board diversity in as well as to industry-related studies. With the example of the Chinese automotive industry, it provides empirical evidence of better performance of firms with gender-diversified boards within the categories tested.

Board diversity and financial performance: empirical evidence from the United Kingdom

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Khaled Hosny ◽  
Adel Elgharbawy
Keyword(s):  
Financial Performance ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Study Data ◽  
Executive Directors ◽  
Cross Sectional ◽  
Board Diversity ◽  
Content Type ◽  
Thomson Reuters ◽  
Education Network

Purpose This study aims to investigate the relationship between board diversity and financial performance from a wide perspective, including multiple dimensions of board diversity. Design/methodology/approach The cross-sectional design of the FTSE 350 companies in the period of 2013–2019 was adopted in this study. Data were collected using the Thomson Reuters Eikon and BoardEx databases and analyzed via ordinary least Squares (OLS) regression. Findings Both gender and skill diversity positively affect financial performance. However, other dimensions of diversity, including board tenure, education and network, have no significant influence on financial performance. On the other hand, nationality diversity negatively affects financial performance, and the gender diversity of executive directors negatively affects market-based performance. The results remain unchanged after considering endogeneity concerns and using alternative measures of financial performance. Practical implications This study provides useful insights into the importance of board diversity and its implications for firm performance, which can help in the development of future regulations and policies, such as female representation on the board. The findings can also guide companies toward the best way of diversifying their boardrooms in different aspects. Originality/value This study extensively investigates board diversity, including gender, tenure, skill and education, network and nationality, using the lens of the resource dependency theory. It also extends the scope of the study to examine some characteristics of executive directors, including gender and age. The evidence is provided from one of the leading countries in regulating corporate governance (CG), i.e. the UK.

scholarly journals MODERATING EFFECT OF FINANCIAL PERFORMANCE ON THE RELATIONSHIP BETWEEN BOARD CHARACTERISTICS AND DIVIDEND POLICY OF LISTED NON-FINANCIAL FIRMS IN NIGERIA

2021 ◽  
Vol 8 (1) ◽  
pp. 34-48
Author(s):  
Alawiyya Ilu ◽  
◽  
Yunusa Ibrahim ◽  
Binta Nuhu ◽  
◽  
...  
Keyword(s):  
Financial Performance ◽  
Dividend Policy ◽  
Moderating Effect ◽  
Policy Implications ◽  
Board Composition ◽  
Board Size ◽  
Board Diversity ◽  
Board Characteristics ◽  
Financial Firms ◽  
The Relationship

The study analyses the moderating effect of financial performance on the relationship between board characteristics and dividend policy of listed non-financial firms in Nigeria. Board characteristics is proxied by board composition, board size, and board diversity, while dividend policy is proxied by dividend pay-out ratio. The positivist research paradigm and correlational research design were used. Relevant data for the study were collected from 39 sampled non-financial firms actively trading on the floor of the Nigerian stock exchange (NSE) from 2008 to 2017; the data collected were analysed using the panel corrected standard error (PCSE) regression analysis. The findings reveal that board composition and board diversity have positive but insignificant effect on dividend pay-out ratio of non-financial firms before moderation, While, board size has positive and significant effect on dividend policy of listed non-financial firms before moderation. The study also found that financial performance moderate the relationship between board characteristics and dividend pay-out ratio of listed non-financial firms. Based on the findings, the study concludes that board composition and board size are related with high dividend payment. Among the important policy implications is that the variable of board size used suggest that there is the need by SEC to monitor the available cash at the discretion of managers since financial performance can moderate the relationship between board size and dividend pay-out ratio in order to mitigate agency conflict between management and shareholders of listed non-financial firms which is in-line with the practical problem of the study. It is therefore recommended amongst others that the government through the regulators should provide an enabling environment for non-financial firms to make a profit and pay more dividends to their shareholders since the interaction effect of financial performance makes the variables of the study to be more active in influencing the dividend pay-out ratio of non-financial firms in Nigeria.

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