Women in the boardroom and financial performance: an analysis of JSE listed companies.
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Date
2022
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Abstract
Despite the awareness created around gender inequality and the diverse strengths women bring to
the business world, progress in gender diversity has been negligible. In South Africa, despite
employment equity policies being established in 1998, after 21 years, women in post-apartheid
South Africa do not occupy even close to an equal share of executive positions in business as
compared to men.
This study explored the association between female representation on company boards and an
organisation’s financial performance. Unlike previous South African studies, this study utilized a
longer period of time, from 2007 to 2016, and included a period during which gender diversity has
increased in pervasiveness and there is a higher proportion of women in executive positions. The
Johannesburg Stock Exchange (JSE) Top 40 listed companies were selected as the sample for this
study. The data of listed companies on the JSE were sourced from the IRESS and the Bloomberg
database. A dynamic linear regression model with generalized method of moments (GMM)
estimation was used to conduct a robust analysis.
This study found a positive and statistically significant relationship between the accounting based
financial measures (return on assets and return on equity) as well as the market-based performance
measure (Tobin’s Q) and board gender diversity, measured as the proportion of women on the
board of directors. This implies that firms with a well gender-diversified board perform better
financially. The study contributes to existing literature on whether achieving gender diversity at a
board level does in fact add significant benefit to shareholders wealth and a firms’ bottom line. It
influences an important policy debate and will be of interest to academics and stakeholders
including directors, investors, regulators and women’s rights advocates.
Description
Masters Degree. University of KwaZulu-Natal, Durban.