Gender Diversity of the Corporate Board and Firm Value: The Case of Nigeria listed Companies

  • Ezekiel Oluwagbemiga Oyerogba College of Social and Management Sciences, Bowen University, Iwo, Osun State, Nigeria
  • Oluyinka Isaiah Ogungbade College of Social and Management Sciences, Afe Babalola University, Ado-Ekiti, Nigeria
Keywords: Gender Diversity, Share Price, Shareholders’ Fund, Capital Gearing, Chief Executive Officer

Abstract

This study empirically investigates the link between gender diversity (in terms of number of women) of the corporate board and firm value on a sample of 163 companies purposively drawn from the 186 companies listed on the Nigeria stock exchange for a period of 2006 to 2015. The study used purely secondary data, analysed using the Univariate paired sample t- statistics and Multivariate regression analysis. The t- statistics enables the study to compare the mean and standard deviation of two categories of results (the results of firms managed by the female CEO and those with the male CEO) and thus determined whether a statistically significant difference can be observed from the firm value of those two distinct groups. The result shows that firms with a significant number of women on the board seem to produce higher firm value. Specifically, the result revealed that firm managed by female CEO produces better value for the firm during the period under consideration than those managed by male CEO. The result holds for all the three variables of firm value (Share price, shareholders’ fund and capital gearing). It was also reported that capital gearing and four of the gender diversity variables are negatively correlated. The negative correlation between capital gearing and gender diversity indicates that the higher the number of female directors the lower the capital gearing or aggression of the board for debit acquisition. The study, therefore, draws the attention of the Nigerian stock exchange and other regulatory authorities to the need for regulation on gender quota in the listed companies in Nigeria.

References

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Shrader, C.B., & Blackburn, V.B (1997). Women in Managementand Firm Financial Performance: An Explorative Study. Journal ofManagerial Issues, 7(9), 355-372.
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Terjesen, S., B. Sealy, F. &,SinghP.M (2007). Does the Presence of Independent and Female Directors Impact Firm Performance? A Multi-Country Study of Board Diversity. Journal of Management & Governance, DOI:10.1007/s10997-014-9307-8, 8(2), 1–37.
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Adams, R., & Ferreira, D. (2009). Women in the Boardroom and Their Impact on Governance and Performance. Journal of Financial Economics, (94), 291-309.
Agrawal, A. &. Knoeber, C.R (1996). Firm value and mechanisms to control agency problems between managers and shareholders, Journal of Financial and Quantitative Analysis 31, 377–397.
Ahern, K. R., & Dittmar, A. K. (2012). The changing of the boards: The impact on firm valuation of mandated female board representation. Quarterly Journal of Economics, 127(1), 137-197.
Ahern, K. &Dittman, A. (2012). The Changing of the Boards: The Impact on Firm Valuation of Mandated Board Representation,” Quarterly Journal of Economics, Vol. 129 No. 1, pp. 137–197.
Bøhren, Ø., &Staubo, S. (2014). Does mandatory gender balance work? Changing organizational form to avoid board upheaval. Journal of Corporate Finance, 28, 152-168.
Bøhren, Ø., &Strøm, R. Ø. (2010). Governance and politics: Regulating independence and diversity in the board room. Journal of Business Finance & Accounting, 37(9‐10), 1281-1308.
Campbell, K. & Vera, A. (2010). Gender Diversity in the Boardroom and Firm Financial Performance. Journal of Business Ethics,(83), pp. 435-451.
Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. Financial Review, 38(1), 33-53.
Carter, D. D'Souza, F. Simkins.B& Simpson, G. (2010). The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance. Corporate Governance: An International Review, pp. 396-414.
Claessens, S. & Joseph P.H. (2002), “Corporate Governance in Asia: A Survey,” International Review of Finance 3(5), 71-103.
Claessens, S, Djankov, S., Fan, J. & Lang, L. (2000), “The Separation of Ownership and Control in East Asian Corporations,” Journal of Financial Economics 58(1), 81-112.
Claessens, S, Djankov, S., Fan, J. & Lang, L. (1999), “Expropriation of Minority Shareholders: Evidence from East Asia,” The World Bank, Policy Research Working Paper Series 2088.
Conyon, M.J. (2006). Executive compensation and incentives”, Academy of Management Perspectives, vol. 20(1): 25-44.
Denis, D.K. &McConnell J.J (2003), “International Corporate Governance,” European Corporate Governance Institute, Finance Working Paper No. 05/2003.
Dezso, C. L., &. Ross, D.G, (2012). Does Female Representation in Top Management Improve Firm Performance? A Panel Data Investigation,” Strategic Management Journal, Vol. 33, pp. 1072–1089.
Dezsö, C. L., & Ross, D. G. (2012). Does female representation in top management improve firm performance? A panel data investigation. Strategic Management Journal, 33, 1072–1089.
Di Pietra , R., Grambovas, C. A., Raonic, I., &Riccaboni, A. (2008). The effects of board size and ‘busy’ directors on the market value of Italian companies. Journal of Management and Governance,12, 73–91.
Doidge, C.G., Karolyi, A. &Stulz, R.M (2004), “Why Do Countries Matter so Much for Corporate Governance?" NBER Working Paper No. 10726.
Doms, M.E. &Jensen J.B (1998), Comparing Wages, Skills, and Productivity between Domestically and Foreign-Owned Manufacturing Establishments in the United States Journal of Financial Economics 53(1), 94-122.
Drago, C., Millo, F., Ricciuti, R., &Satella, P. (2011). The role of women in the Italian network of boards of directors, 2003–2010. University of Verona working paper 10.
Duchin, R., Matsusaka, J. G., &Ozbas, O. (2010). When are outside directors effective? Journal of Financial Economics,96, 195–214.
Durnev, A & Kim H.A (2005), “To Steal of Not to Steal: Firm Attributes, Legal Environment, and Valuation,” Journal of Finance 60 No. 3(6), 1461-1493.
Dyck, A &Zingales L. (2004), “Private Benefits of Control: An International Comparison,” Journal of Finance 59 537-600.
Easterwood, J. C., Ince, O. S., & Raheja, C. G. (2012). The evolution of boards and CEOs following performance declines. Journal of Corporate Finance,18, 727–744.
Erhardt, N. L., Werbel, J. D., & Shrader, C. B. (2003). Board of director diversity and firm financial performance. Corporate Governance: An International Review,11, 102–111.
Faleye, O., Hoitash, R., &Hoitash, U. (2011). The costs of intense board monitoring. Journal of Financial Economics,101, 160–181.
Fama, E.F. & French, K.F (2013), “Common risk factors in the returns on stocks and bonds,”Journal of Financial Economics 33, 3-56.
Francoeur, C. R. (2007). Gender Diversity in Corporate Governance and Top Management. Journal of Business Ethics, Vol 81, pp.83-95.
Goh, B. W., & Li, D. (2013). The disciplining effect of the internal control provisions of the Sarbanes–Oxley Act on the governance structures of firms. The International Journal of Accounting, 48(2), 248–278.
Kim, J.-B., Song, B. Y., & Zhang, L. (2011). Internal control weakness and bank loan contracting: Evidence from SOX Section 404 disclosures. The Accounting Review, 86(4), 1157–1188.
Kothari, S. P., Leone, A. J., &Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39(1), 163–197.
Lone, C. Huidan, L. Joana, P. Petia and Rima (2016). Gender Diversity in Senior Positions and Firm Performance: Evidence from Europe, IMF working paper, 16(50).
Oyerogba, E.O (2018). Corporate governance practices and foreign direct investment: The case of Nigerian listed companies. International Journal of Finance and Accounting, 8(4), 312-339.
Oyerogba, E.O. Alade, M.E. Idode, P.E. &Ogungbade, O.I. (2017) “Impact of board oversight functions on the performance of listed companies in Nigeria”, Journal of Accounting and Management Information System, vol. 16 (3): 143-151.
Oyerogba, E.O. Memba, F. &Riro, G.K (2016) “Impact of board size and firm’s characteristics on the profitability of listed companies”, Research Journal of Finance and Accounting, vol. 7 (4): 143-151.
Robinson, G. &Dechant, K, (2007). Building a business case for diversity, Academy of Management Executive 11, 21–30.
Shrader, C.B., & Blackburn, V.B (1997). Women in Managementand Firm Financial Performance: An Explorative Study", Journal ofManagerial Issues, 9, 355-372.
SEC (2011). Code of corporate governance for public companies retrieved on 28th August, 2013 from http://www.sec.gov.ng/
Singh, V., &Vinnicombe S. (2004), "Why so FewWomen Directors in TopUK Boardrooms: Evidence and Theoretical Explanations", CorporateGovernance: An International Review, 12, 479-488.
Smith, N., V. Smith, & Verner, M (2005). Do Women in Top Management affect Firm Performance? A Panel study of 2500 Danish Firms,” Discussion Paper August (Bonn: Institute for the Study of Labor).
Schwartz-Ziv, M., (2013). Does the Gender of the Directors Matter?” Working Paper No. 8, Edmond J. Safra Center for Ethics Working Paper Series, Harvard.
Terjesen, S., B. Sealy, F. &,Singh P.M (2007). Does the Presence of Independent and Female Directors Impact Firm Performance? A Multi-Country Study of Board Diversity,” Journal of Management & Governance, DOI:10.1007/s10997-014-9307-8, pp. 1–37.
Zelechowski, D. D., & Bilimoria, D. (2004). Characteristics of women and men corporate inside directors in the US. Corporate Governance: An International Review, 12(3), 337–342.
Published
2020-06-03
How to Cite
Oyerogba, E. O., & Ogungbade, O. I. (2020). Gender Diversity of the Corporate Board and Firm Value: The Case of Nigeria listed Companies. Global Journal of Accounting, 6(1), 53-68. Retrieved from http://ujmst.unilag.edu.ng/index.php/gja/article/view/876
Section
Articles