DOES GENDER DIVERSITY IN CORPORATE BOARDS PAY OFF? A STUDY ON THE BANKING SECTOR OF BANGLADESH

Abstract

The objective of this research is to examine whether gender diversity in the
boards of directors results in better financial performances of the banks in
Bangladesh. In light of agency theory and resource dependency theory, board
gender diversity should have positive influence on firm performance. However,
empirical researches on the issue have provided perplexing results. Hence
further investigation is worth exploring. Unlike past empirical works, this
study has broken down firm profitability using DuPont’s identity to investigate
different aspects of financial performance; such as efficiency and risk-taking
behavior. Data were collected from 5 year (2013-2018) annual reports of the
all commercial banks listed in Dhaka Stock Exchange. Simple descriptive,
correlation and linear regression analysis were done to examine the role of
board gender diversity on firm performance. The results of correlation and
regression analysis do not demonstrate any significant association between
board gender diversity and the measures of profitability, asset utilization
efficiency and financial leverage, which is contrasting to the broadly held belief
of the proponents of the board gender diversity agenda. Perhaps, gender stereo
type, tokenism, suboptimal decision process, female directors’ background and
recruitment process can explain such contrasting results. The study therefore
should entice practitioners and future researchers to dig deep into the reasons
of getting such contrasting results.