THE IMPACT OF FEMALE DIRECTORS ON FIRM PERFORMANCE: EVIDENCE FROM INDONESIA

Triana .; Marwan Asri

doi:10.22146/jieb.21994

THE IMPACT OF FEMALE DIRECTORS ON FIRM PERFORMANCE: EVIDENCE FROM INDONESIA

https://doi.org/10.22146/jieb.21994

Triana .^(1*), Marwan Asri⁽²⁾

(1) MM UGM
(2) Faculty of Economics and Business Universitas Gadjah Mada
(*) Corresponding Author

Abstract

This research shows the impact of female directors on firm performance in Indonesia by using as its sample the public companies listed on the Indonesian Stock Exchange (IDX) from 2011 until 2015. There were 347 companies, with 1,735 samples observed. This research uses the multiple regression method. The model is a modified model from 9 recent articles published between 2012 and 2015. The empirical result shows that a female director has a positive significant effect on firm performance. The control variables, consisting of leverage, firm size and firm age have negative significance for firm performance. This research is conducted across 9 sectors of industrial classification, which support the International Finance Corporation (IFC) in increasing the number of female directors in Indonesia. For managers, this research will promote gender development in the boardroom, female executive training programmes as well as female representation on boards of directors. For regulators, this research may provide a contribution to gender representation in board’s policies, rules and regulations. This research can build awareness of women’s contributions to firms and encourage a greater female presence in the boardroom.

Keywords

female; firm performance; behavior; firm characteristics

Full Text:

PDF

References

Adams, R. B., and Ferreira, D., 2009. “Women in the Boardroom and Their Impact on Governance and Performance”. Journal of Financial Economics, 94, 291-309.

Campbell, K., and Vera, A. M, 2008. “Gender Diversity in the Boardroom and Firm Financial Performance”. Journal of Business Ethics, 83 (3), 435-451.

Campbell, K., and Vera, A. M, 2010. “Female Board Appointments and Firm Valuation: Short and Long Term Effects”. Journal of Management Governance, 14, 37-59.

Chakrabarty, S., and Bass, A. E., 2014. “Corporate Governance in Microfinance Institutions: Board Composition and The Ability to Face Institutional Voids”. Corporate Governance International Review, 22, 367-386.

Darmadi, S., 2010. “Board Diversity and Firm Performance: The Indonesian Evidence”. Munich Personal RePec Archive Paper, 38721.

Deloitte Global Center for Corporate Governance. Electronic source. Available at www2.deloitte.com/content/dam/Deloitte/global/Documents/Risk/gx-ccg-women-in-the-boardroom-a-global-perspectivepdf, at September 4^th, 2016.

Dezso, C. L. and Ross, D. G., 2012. “Does Female Representation in Top Management Improve Firm Performance? A Panel Data Investigation”. Strategic Management Journal.

Eagly, A. H., 1987. “Sex Differences in Social Behavior: A Social-Role Interpretation”. Lawrence Erlbaum Associates, Hillsdale.

Eagly, A. H., and Johannesen-Schmidt, M. C., 2001. “The Leadership Styles of Women and Men”. Journal of Social Issues, 57 (4), 781-797.

Ellwood and Garcia-Lacalle, J., 2015. “The Influence of Presence and Position of Women on the Boards of Directors: The Case of NHS Foundation Trusts”. Journal of Business Ethics, 130, 69-84.

Erhardt, N. L., Werbel, J. D., and Shrader, C. B., 2003. “Board of Director Diversity and Firm Financial Performance”. Corporate Governance, 11 (2). 102-111.

Folkman, Z., 2012. “A Study in Leadership: Women do it Better than Men”. Accessed from http://zengerfolkman.com/media/ articles/ZFCo.WP.WomenBetterThanMen.033012.pdf at September 20^th, 2016.

Francoeur, C., Labelle, R. and Sinclair-Desgagne, B., 2008. “Gender Diversity in Corporate Governance and Top Management”. Journal of Business Ethics, 81 (1), 83-95.

Frink, D. D., Robinson, R. K., Reithel, B., Arthur, M. M., Ammeter, A. P., Ferris, G. R., Kaplan, D. M., and Morrisette, H. S., 2003. “Gender Demography and Organization Performance”. Group and Organization Management, 28 (1), 127-147.

Garcia-Meca, E., Garcia-Sanchez, I., and Martinez-Ferrero, J., 2015. “Board Diversity and Its Effects on Bank Performance: An International Analysis”. Journal of Banking and Finance, 53, 202-214.

George, W., 2012. “Developing the Global Leader”. Harvard Business School Working Knowledge. Accessed from http://hbswk. hbs.edu/item/developing-the-global-leader at Oktober 1^st 2016.

Ghozali, H. I., 2016. “Aplikasi Analisis Multivariate dengan Program IBM SPSS 23”. Badan Penerbit Universitas Diponegoro, Semarang.

Gujarati, D., 2004. “Basic Econometrics 4^th Edition”. McGraw-Hill, New York.

Gulamhussen, M. A. and Santa, S. F., 2015. “Female Directors in Bank Boardrooms and Their Influence on Performance and Risk Taking”. Global Finance Journal, 28, 10-23.

Hambrick, D. C. and Mason, P. A., 1984. “Upper Echelon: The Organization as A Reflection of Its Top Managers”. Academy of Management Review, 9 (2), 193-206.

Hambrick, D. C., 2007. “Upper Echelon Theory: An Update”. Academy of Management Review, 32 (2), 334-343.

Helgeson. V. S., 2012. “The Psychology of Gender”. Pearson Education, New Jersey.

Huang, J., and Kisgen, D., 2013. “Gender of Corporate Finance: Are Male Executives Overconfident Relative to Female Executives:”. Journal of Financial Economics, 108, 822-839.

Ibarra, H. and Obodaru, O., 2009. “Women and the Vision Thing”. Harvard Business Review. Accessed at https://hbr.org/ 2009/01/women-and-the-vision-thing at September 20^th, 2016.

Jensen, M. C. and Meckling, W. H., 1976. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure”. Journal of Financial Economics, 3 (4), 305-360.

Joecks, J., Pull, K., and Vetter, K., 2013. “Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?”. Journal of Business Ethics, 118, 61-72.

Jungmann, C. M., 2006. “The Effectiveness of Corporate Governance in One-Tier and Two Tier Board Systems: Evidence from the UK and Germany”. European Company and Financial Law Review, 3 (4), 426-474.

Krishnan, H. and Daewoo, P., 2005. “A Few Good Women on Top Management teams”. Journal of Business Research, 58, 1712-1720.

Labelle, R., Francoeur, C., and Lakhal, F., 2015. “To Regulate or Not To Regulate? Early Evidence on the Means Used Around the World to Promote Gender Diversity in the Boardroom”. Gender, Work and Organization, 22 (4), 339-363.

Lam, K. C. K., McGuinness, P.B., and Vieito, J. P., 2013. “CEO Gender, Executive Compensation and Firm Performance in Chinese-Listed Enterprises”. Pacific-Basin Finance Journal, 21, 1136-1159.

Levy, P. E., 2003. “Industrial/Organizational Psychology Understanding the Workplace”. Houghton Mifflin Company, Boston.

Liu, Y., Zuobao, W., and Feixue, X., (2014). “Do Women Directors Improve Firm Performance in China?”. Journal of Corporate Governance, 28, 169-184.

McKinsey & Company., 2007. “Women Matter: Gender Diversity, A Corporate Performance Driver”. Accessed from http://www. raeng.org.uk/publications/other/women-matter-oct-2007 at September 1^st, 2016.

McKinsey & Company., 2008. “Female Leadership, a Competitive Edge for the Future”. Accessed from http:// www.mckinsey.com/global-themes/women-matter at September 1^st, 2016.

McKinsey & Company., 2010. “Women at the Top of Corporations: Making It Happen”. Accessed from http://www.mckinsey.com/ search?q=Women at the Top of Corporations Making it Happen at September 1^st, 2016.

Miller, T. and Triana, M. C., 2009. “Demographic Diversity in the Boardroom: Mediators of the Board Diversity – Firm Performance Relationship”. Journal of Management Studies, 46 (5), 755-786.

Peni, E., 2014. “CEO and Chairperson Characteristics and Firm Performance”. Journal of Management Governance, 18, 185-205.

Pfeffer, J. and Salancik, G. R., 1978. “The External Control of Organizations: A Resource Dependence Perspective”. Harper & Row, New York.

Post, C. and Byron, K., 2015. “Women on Boards and Firm Financial Performance: A Meta Analysis”. Academy of Management Journal, 58 (5), 1546-1571.

Republik Indonesia., 2007. “Undang-Undang Republik Indonesia Nomor 40 Tahun 2007 tentang Perseroan Terbatas”. Jakarta: Sekretariat Negara.

Smith, N., Smith, V., and Verner, M., 2006. “Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms”. International Journal of Productivity and Performance Measurement, 55 (2), 569-593.

Strom, R. D’Espallier, B. Mersland, R., 2014. “Female Leadership, Performance and Governance in Microfinance Institution”. Journal of Banking and Finance, 42, 60-75.

T. Eckes and H. M. Trautner (Eds.)., 2000. “Social Role Theory of Sex Differences and Similarities: A Current Appraisal”, The Developmental Social Psychology of Gender, 123-174.

Wood, W., and Eagly, A. H., 2002. “A Cross-Cultural Analysis of the Behavior of Women and Men: Implications for the Origin of Sex Differences”. Psychological Bulletin, 128, 699-727.

DOI: https://doi.org/10.22146/jieb.21994

Article Metrics

Abstract views : 8558 |

Refbacks

There are currently no refbacks.

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Journal of Indonesian Economy and Business

Journal

Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism

Authors

Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees

Download

Author Pack
Submission Form & Manuscript Template

Reviewer

Reviewer Guidelines
Reviewer Acknowledgement

Reader

General Search
Achieves
Author index
Title index

The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

Visitor Statistics