The effect of the sex diversity of the board of commissioners on firm performance and the role of the ethnic background of president commissioners

Nanik Ermawati and Noorlailie Soewarno

Cogent Business & Management, 2024, vol. 11, issue 1, 2319115

Abstract: This study aims to obtain empirical evidence on the effect of the sex diversity of the board of commissioners (SDBOC) on firm performance (FP). In addition, this study examines the role of the ethnic background of the president commissioner (ETC) as a moderating variable that strengthens the influence of the sex diversity of the board of commissioners (SDBOC) on firm performance (FP). The sample consists of manufacturing companies, registered as public companies in Indonesia between 2017 and 2021, resulting in 783 observations. The data analysis includes several multivariate regression techniques consisting of ordinary least squares (OLS), fixed effects (FE), and the Heckman selection model for data robustness and hypothesis testing. The results showed that the sex diversity of the board of commissioners increased firm performance, as measured by Tobin’s Q (TQ), but it had no significant effect on the market to book value (MBV). Furthermore, the ethnic background of the president commissioner strengthened the influence of the sex diversity of the board of commissioners on firm performance, as measured by TQ and MBV. The results support the theories used, namely agency theory, resource dependence theory, and upper echelon theory. Shareholders can use the result of this study to highlight certain aspects during the appointment of the board of commissioners, in terms of their gender diversity and the ethnic background of the president commissioner. Meanwhile, the required number of women on the board of commissioners, to improve board decisions, equates to two. This is supported by the critical mass theory.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2024.2319115 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:oabmxx:v:11:y:2024:i:1:p:2319115

Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20

DOI: 10.1080/23311975.2024.2319115

Access Statistics for this article

Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar

More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().