The impact of gender diversity in the boardroom on firm performance: A South African perspective

Abstract

The study employs panel methodology and Ordinary Least Squares (OLS) multiple regression to examine the impact of board gender diversity on firm performance for a sample of 137 Johannesburg Stock Exchange (JSE) listed firms during the period 2002 and 2011. The results show that board gender diversity among South African firms have been improving substantially since 2002 when King II came into force. In 2002, the average South African board had only 4 per cent of women and by 2011, this had increased to 13 per cent. Notably, the findings also show that large South African firms have a greater representivity of women on their boards than small firms. By inference this could mean that gender diversity has a positive influence on firm value as findings further show that firm value in large firms is higher than that in small firms. This study contribute to the debate of whether board gender diversity influences firm value and whether the South African government should consider adopting quota legislation such as in Spain, Norway, The Netherlands and France. The findings suggest that there is evidence of a business case to advocate the implementation of quota legislation in South Africa. Empirical findings proceed to confirm that theories of corporate governance such as agency, resource-dependence, signalling and stakeholding surely provide some support to understanding the relationship between board gender diversity and firm performance.