Board Gender Diversity, Family-Connected Directors and Firm Value

34 Pages Posted: 5 Oct 2018

See all articles by Sudheer Reddy

Sudheer Reddy

T A Pai Management Institute

Madhu Veeraraghavan

T.A. PAI Management Institute, Finance Area

Aditya Jadhav

IBS Hyderabad, IFHE University

Date Written: September 1, 2018

Abstract

The problem that plagues Indian family-controlled firms is expropriation of minority shareholders by majority shareholders. Gender quota legislation that mandates appointment of at least one female director without specifying the director type as “independent” exacerbates this principal-principal agency problem. This study investigates the effect of family-connected female directors on the performance of family-controlled firms. Using a large sample of 978 publicly listed Indian firms spanning the period 2013-2016, we find some novel results. First, we show that the presence of family-connected female directors has a negative impact on firm performance. Second, we show that the presence of independent female directors has a positive impact on firm performance. We also show a positive association between board gender diversity and firm performance. In additional analysis, we find that the increasing presence of family-connected directors has a negative impact. Taken together, our findings contribute to the growing literature on board gender diversity, especially in emerging markets where boards are perceived to be ineffective monitors.

Keywords: Board Gender Diversity, Family Firms, Family Directors, Female Directors

JEL Classification: G28, G34

Suggested Citation

Reddy, Sudheer and Veeraraghavan, Madhu and Jadhav, Aditya, Board Gender Diversity, Family-Connected Directors and Firm Value (September 1, 2018). Available at SSRN: https://ssrn.com/abstract=3248279 or http://dx.doi.org/10.2139/ssrn.3248279

Sudheer Reddy

T A Pai Management Institute ( email )

PB No 9
80 Badagabettu
Manipal, Karnataka 576104
India

Madhu Veeraraghavan (Contact Author)

T.A. PAI Management Institute, Finance Area ( email )

Bangalore
Manipal, Karnataka 576104
India
+91-820-2701030 (Phone)

Aditya Jadhav

IBS Hyderabad, IFHE University ( email )

Donthanapally Shankarapalli Road
RAJAWALA ROAD
Hyderabad, RI Andhra Pradesh 501203
India

Register to save articles to
your library

Register

Paper statistics

Downloads
33
Abstract Views
637
PlumX Metrics