Gender Diversity and Firms’ Sustainable Performance: Moderating Role of CEO Duality in Emerging Equity Market

Abstract

The objective of the study is to investigate the impact of female representation on boards and female CEOs on firms’ sustainable performance in the context of an emerging economy. We also introduce the CEO duality as a moderator variable between sustainable firm performance and board gender diversity. For this purpose, the study uses a panel data sample from 2005 to 2020 for non-financial listed firms in Pakistan. We use the firm’s operational self-sufficiency for the sustainable performance of firms. For robustness, the study also uses other accounting-based and market-based proxies. We apply the static (fixed and random effect) and dynamic panel estimation (GMM) techniques to deal with the heterogeneity and dynamic endogeneity issues in panel data estimation. The finding shows a significant positive impact of female directors on board and female CEOs on sustainable performance, whereas CEO duality does not moderate this relationship. Furthermore, we find that CEO duality has a significant negative impact on firms’ sustainable performance, which supports the agency theory hypothesis. The study also controls corporate board level factors, including board size and board independence, and uses leverage, firm size, capital expenditure, and tangible assets as firm-level control. The results also reveal that board size and board independence have a significant positive impact on firms’ sustainable performance. Furthermore, firm size, tangibility, and firm age have a significant positive, whereas leverage and capital expenditure have a negative impact on firms’ sustainable performance. Finally, the study has policy implications for stakeholders.