Equbusiness book VERSION 28SEPT2023 - Flipbook - Page 74
theory and resource dependence theory. Based on the agency theory, gender equality in the board of directors
can be seen as promoting different perspectives and alternatives, leading to the board making more independent
and objective decisions. Consequently, these effective decisions are expected to have a positive impact on
financial performance (Carter et al., 2003). Additionally, since women are expected to approach complex
situations with a fresh perspective, their effectiveness in strategy development and problem-solving is believed to
positively impact financial performance (Francoeur et al., 2008). According to the resource dependence theory,
the board of directors obtains resources from the external environment by providing the firm with information
and expertise. In this regard, gender diversity in the board of directors is expected to positively affect firm
performance by facilitating the acquisition of different resources through various means (Hillman et al., 2000).
The "multiplier effect" of gender equality is increasingly recognised. It is expected that when women's stronger
communication and listening skills compared to men are combined, especially in problem-solving and
decision-making, women board members are likely to outperform male board members, which is also expected
to enhance the financial performance of the firms (Robinson and Dechant, 1997). One rationale in support of
gender equality posits that a board characterized by gender equity possesses a broader spectrum of options
upon which to ground its decision-making processes. Moreover, a board featuring greater gender diversity is
more prone to rendering decisions of superior quality (Kochan et al., 2003; Singh and Vinnicombe, 2004; Smith et
al., 2006). In a management approach characterized by gender equality, it is expected that decision-making
processes diversify, leading to more constructive and higher-quality decisions. At this point, the independence of
women board members is also important. Female board members who are firm owners do not provide the
expected heterogeneity in corporate boards.
Additionally, the experience, knowledge, values, moral orientation, ethical attitudes, and societal concerns of
women board members can have a positive impact on corporate social responsibility in specific areas, which can
influence performance (Byron and Post, 2016). When considered within the scope of social sustainability, women
members in corporate boards serve as role models by motivating women members at lower levels of the firm
(Singh et al., 2008). As a result, women employees with opportunities for advancement experience increased
motivation, which positively impacts financial performance. Furthermore, when gender equality spreads
throughout the organization, the business contributes to society and aligns with sustainable development goals,
thus enhancing its corporate image. A strong corporate reputation brings along customer and investor loyalty
(Daily and Dalton, 2003).
In some studies, found in the literature, a positive relationship between gender equality and firm performance
has been identified to support these theories (Adler, 2001; Erhardt et al., 2003; Carter et al., 2003;
Lückerath-Rovers, 2010; Otluoglu et al., 2016). Adler (2001), claimed that an increase in the number of women
also leads to an improvement in performance. According to Carter et al. (2003) findings, there is a positive
relationship between gender diversity and firm value. Also, Erhardt et al. (2003) found that gender diversity
affected ROA positively, and more women on the boards relates significantly and positively to ROE. Similarly, the
research of Erhardt et al. (2003) and Otluo lu et al. (2016) determined that women board membership affects
ROE and Tobin9s Q. However, in many studies, no relationship has been found between gender equality and
financial performance (Smith et al., 2006; Randøy et al., 2006; Rose, 2007; Wang and Clift, 2009; Mente`, 2011;
Karayel and Do an, 2014). The studies in their research (Smith et al., 2006) found that women in CEO positions
had a positive impact on firm performance, while the women on any boards had no effect. Also, Randøy et al.
(2006) have examined the impact of gender diversity on the profitability and value of the firm. As a result of the
regression models developed, they could not find a significant effect of gender diversity on ROA and the market
value of firms. Similarly, through the analysis conducted by Rose (2007), no significant relationship was found
between the proportion of women board members and Tobin's Q in their study. Wang and Clift (2009)
determined that gender diversity did not have an impact on ROA and ROE. Karayel and Do an (2014) and Mente`
(2011) also found similar results in their studies. In addition, some studies have found a negative relationship
between the proportion of women on corporate boards and financial performance (Adams and Ferreira, 2009;
