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Who selects the ‘right’ directors? An examination of the association between board selection, gender diversity and outcomes

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  • Marion Hutchinson
  • Janet Mack
  • Kevin Plastow
  • Gary Monroe

Abstract

type="main" xml:id="acfi12082-abs-0001"> Using a sample of companies from the top 500 listed firms in Australia, we investigate whether the presence of a designated nomination committee and female representation on the nomination committee affect board gender diversity. We also examine whether gender diversity on the board affects firm risk and financial performance. We find that board gender diversity is significantly and positively associated with the presence of a designated nomination committee and that female representation on the nomination committee is a significant explanatory factor of increasing board gender diversity following the release of the 2010 Australian Securities Exchange Corporate Governance Council (ASXCGC) recommendations. Further, our results support the business case for board gender diversity as we find greater gender diversity moderates excessive firm risk which in turn improves firms' financial performance. Our results are robust after correcting for selection bias and controlling for other board, firm and industry characteristics.

Suggested Citation

  • Marion Hutchinson & Janet Mack & Kevin Plastow & Gary Monroe, 2015. "Who selects the ‘right’ directors? An examination of the association between board selection, gender diversity and outcomes," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 55(4), pages 1071-1103, December.
    • Handle: RePEc:bla:acctfi:v:55:y:2015:i:4:p:1071-1103
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    File URL: http://hdl.handle.net/10.1111/acfi.2015.55.issue-4
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    Cited by:

    1. He, Ping & Ma, Lin & Wang, Kun & Xiao, Xing, 2019. "IPO pricing deregulation and corporate governance: Theory and evidence from Chinese public firms," Journal of Banking & Finance, Elsevier, vol. 107(C), pages 1-1.
    2. Robert W Faff & Stephen Gray & Kelvin Jui Keng Tan, 2016. "A contemporary view of corporate finance theory, empirical evidence and practice," Australian Journal of Management, Australian School of Business, vol. 41(4), pages 662-686, November.
    3. Catarina Fernandes & Jorge Farinha & Francisco Vitorino Martins & Cesario Mateus, 2018. "Bank governance and performance: a survey of the literature," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(3), pages 236-256, July.
    4. Díez-Martín, Francisco & Miotto, Giorgia & Cachón-Rodríguez, Gabriel, 2022. "Organizational legitimacy perception: Gender and uncertainty as bias for evaluation criteria," Journal of Business Research, Elsevier, vol. 139(C), pages 426-436.
    5. Pornsit Jiraporn & Pandej Chintrakarn & Shenghui Tong & Sirimon Treepongkaruna, 2018. "Does board independence substitute for external audit quality? Evidence from an exogenous regulatory shock," Australian Journal of Management, Australian School of Business, vol. 43(1), pages 27-41, February.
    6. Maria Giuseppina Bruna & Rey Dang & Marie-José Scotto & Aymen Ammari, 2019. "Does board gender diversity affect firm risk-taking? Evidence from the French stock market," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(4), pages 915-938, December.
    7. Lucas, Ryley & Gunasekarage, Abeyratna & Shams, Syed & Edirisuriya, Piyadasa, 2021. "Female directors and acquisitions: Australian evidence," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    8. Oumeima Kacem & Sana El Harbi, 2022. "Do risk governance and effective board affect bank performance? Evidence from large banks worldwide," Risk Management, Palgrave Macmillan, vol. 24(4), pages 461-483, December.
    9. García Lara, Juan Manuel & García Osma, Beatriz & Mora, Araceli & Scapin, Mariano, 2017. "The monitoring role of female directors over accounting quality," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 651-668.
    10. Ammad Ahmed & Muhammad Atif & Ernest Gyapong, 2021. "Boardroom gender diversity and CEO pay deviation: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(2), pages 3135-3170, June.
    11. Marisetty, Vijaya Bhaskar & Prasad, Salu, 2022. "On the side effects of mandatory gender diversity laws in corporate boards," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    12. Husam Aldamen & Janice Hollindale & Jennifer L. Ziegelmayer, 2018. "Female audit committee members and their influence on audit fees," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(1), pages 57-89, March.
    13. Rakesh Pandey & Pallab Kumar Biswas & Muhammad Jahangir Ali & Mansi Mansi, 2020. "Female directors on the board and cost of debt: evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 4031-4060, December.
    14. Detthamrong, Umawadee & Chancharat, Nongnit & Vithessonthi, Chaiporn, 2017. "Corporate governance, capital structure and firm performance: Evidence from Thailand," Research in International Business and Finance, Elsevier, vol. 42(C), pages 689-709.
    15. Sarowar Hossain & Larelle Chapple & Gary S. Monroe, 2018. "Does auditor gender affect issuing going‐concern decisions for financially distressed clients?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(4), pages 1027-1061, December.
    16. Millicent Chang & Andrew B. Jackson & Marvin Wee, 2018. "A review of research on regulation changes in the Asia‐Pacific region," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(3), pages 635-667, September.
    17. Janice Hollindale & Pamela Kent & James Routledge & Larelle Chapple, 2019. "Women on boards and greenhouse gas emission disclosures," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(1), pages 277-308, March.

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