Does the Cultural Dimension Influence the Relationship between Firm Value and Board Gender Diversity in Saudi Arabia, Mediated by ESG Scoring?

Laila Mohamed Alshawadfy Aladwey () and Raghad Abdulkarim Alsudays
Additional contact information
Laila Mohamed Alshawadfy Aladwey: Department of Accounting, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11432, Saudi Arabia
Raghad Abdulkarim Alsudays: Department of Accounting, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11432, Saudi Arabia

JRFM, 2023, vol. 16, issue 12, 1-21

Abstract: The scarcity of female directors on Saudi boards is linked to cultural and social barriers deeply rooted in traditional masculine norms. Our study investigates the mediating role of ESG scores in the relationship between board gender diversity and firm value within the Saudi context. The Structural Equation Model (SEM) was utilized based on a sample of 54 Saudi-listed financial companies on (Tadawul) during 2021–2022. The study unveiled a negative correlation between female director presence and Saudi firm value. This association is attributed to the prevailing male-dominated Saudi societal norms, where boards with more female members may hesitate to prioritize performance-driven actions due to concerns about their perceived legitimacy within traditional gender roles. Conversely, a positive correlation was observed between female director presence and ESG scores, aligning with existing research highlighting the role of board gender diversity in improving sustainability performance. The sustainability framework prevails over the influence of gender diversity, fully integrating it within the broader context of sustainability to enhance the value of Saudi companies. Our results are consistent when considering alternative measures of firm value. Our findings offer valuable insights for investors assessing board gender diversity’s impact on company value and emphasize the role of gender diversity in enhancing sustainability. They suggest that greater female representation on boards is vital for ESG score improvement, promoting sustainable initiatives and overall firm value. This calls for policymakers to promote sustainability disclosures and establish guidelines for increased female board participation, considering the absence of mandatory quotas.

Keywords: gender diversity; firm value; ESG disclosure; Saudi Arabia; masculinity—feminist cultural dimension (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/1911-8074/16/12/512/pdf (application/pdf)
https://www.mdpi.com/1911-8074/16/12/512/ (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:gam:jjrfmx:v:16:y:2023:i:12:p:512-:d:1297838

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().