Do women on corporate boards of directors improve corporate financial performance? Evidence from Indian listed firms

Abstract

This research explores the relationship between women on corporate boards (WoCB) and the performance of firms listed on the Bombay Stock Exchange (BSE). Corporate boards play a vital role in governance and agency theory (AT). In India, this relationship is also examined through resource dependency theory (RDT), social role theory (SRT), human capital theory (HCT), and tokenism theory (TT). Using six years of data (2018 2023) from Bloomberg and Refinitiv Eikon, this quantitative study analyses over 3,600 firm-years. WoCB is divided into sub-components made up of women executive directors (WoED), women non-executive directors (WoNED),women committee chairs (WoComCh), and women chief executives (WoCEO). Firm performance is measured using Tobin’s Q (TBQ), Return on Equity (ROE), and Return on Assets (ROA). Control variables are categorised into governance and financial factors, analysed with OLS regression, winsorised datasets, and lagged analyses to ensure robustness. Results indicate that while WoCB is positively linked to firm performance for marketbased measures, individual roles show weak or insignificant relationships. These findings question assumptions from RDT and HCT, highlighting regulatory gaps and the challenges faced by women in India’s corporate sector. This study fills a critical research gap on WoCB in India, offering insights into the nuanced impact of women’s boardroom roles. It underscores the need for stronger policies, improved regulation enforcement, and better education, training, and mentoring for women, ensuring their equitable contributions and enhanced representation in corporate leadership.

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Identifiers

ORCID for Collins Ntim: orcid.org/0000-0002-1042-4056

ORCID for Ven Tauringana: orcid.org/0000-0002-1433-324X

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