Gender diversity in corporate boards and firm risk-taking: Evidence from Pakistan

Shakeel Sobia () and Khawaja Mohsin ()
Additional contact information
Shakeel Sobia: Department of Finance, School of Business Studies, Institute of Business Administration, University Road, Karachi 75270, Pakistan
Khawaja Mohsin: Department of Finance, School of Business Studies Institute of Business Administration, University Road, Karachi 75270, Pakistan

Economics and Business Review, 2025, vol. 11, issue 3, 119-142

Abstract: Using annual data from 49 publicly listed non-financial firms from January 2011 to December 2022, this study investigates how board gender diversity affects firm risk-taking behaviour in Pakistan. We use the exogenous shock introduced by the Securities and Exchange Commission of Pakistan (SECP) through the Companies Act in 2017, mandating the inclusion of at least one female director on corporate boards in Pakistan. To address endogeneity, we employ the Two-stage Least Squares (2SLS) and Two-stage Residual Inclusion (2SRI) estimations and validate the findings with the Difference-in-Differences (DiD) and Markov Switching (MS) models. The results indicate that greater female board representation correlates significantly with lower financial leverage and reduced earnings volatility. These results suggest that mandated gender diversity can shape strategic decisions that can help mitigate firm-level financial risk.

Keywords: board diversity; risk; leverage; capital allocation efficiency; Difference-in-Differences; Markov Switching (search for similar items in EconPapers)
JEL-codes: G32 G34 J16 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.18559/ebr.2025.3.2135 (text/html)

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:vrs:ecobur:v:11:y:2025:i:3:p:119-142:n:1004

DOI: 10.18559/ebr.2025.3.2135

Access Statistics for this article

Economics and Business Review is currently edited by Tadeusz Kowalski

More articles in Economics and Business Review from Sciendo
Bibliographic data for series maintained by Peter Golla ().