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Do Women Directors Impact Financial Outcomes? The Indian Evidence

Author

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  • Anil Kumar
  • Narander Kumar Nigam
  • Kirtivardhan Singh

Abstract

This article investigates the impact of women directors on financial outcomes—return and risk of Indian companies. It applies fixed and random effects Tobit regressions to examine the effect of female directors on financial outcomes (returns and risk) of the firm, controlling promoters’ shareholding, leverage, firm growth and age, board size and board meetings. The study does not find any support to agency and resource dependence theories because the proportion of women directors in most Indian boards is too small to make much impact. However, it has a moderating influence to reduce variations in accounting profits and stock returns. The investors reward also meeting the regulatory quota of woman member on the boards by higher market returns indicating a signalling effect. The study adds an understanding of quota induced women directors’ influence on the firm’s financial outcomes. However, the regulators should be cautious in mandating induction of women members on the boards as they might be inexperienced or lack the needed grounding to effectively influence board processes.

Suggested Citation

  • Anil Kumar & Narander Kumar Nigam & Kirtivardhan Singh, 2020. "Do Women Directors Impact Financial Outcomes? The Indian Evidence," Indian Journal of Corporate Governance, , vol. 13(2), pages 119-139, December.
    • Handle: RePEc:sae:ijcgvn:v:13:y:2020:i:2:p:119-139
    DOI: 10.1177/0974686220966813
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    Cited by:

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    2. Maria Camila Arango-Home & Juan David González-Ruiz & Alejandro Valencia-Arias, 2023. "Relationship between Women on Board Directors and Economic Value Added: Evidence from Latin American Companies," Sustainability, MDPI, vol. 15(17), pages 1-21, September.

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