Exploring the relationship between female director's profile and sustainability performance: Evidence from the Middle East

Ayman Issa, Mohammad A. A. Zaid and Jalal Rajeh Hanaysha

Managerial and Decision Economics, 2022, vol. 43, issue 6, 1980-2002

Abstract: This paper purposes to analyze how female directors' human capital can influence the development of sustainability performance. Specifically, we classified the human capital of female directors into three categories including highly educated members, community influentials, and business experts to determine which particular types of these categories can foster sustainability performance. The estimation is based on a sample of 93 nonfinancial firms listed on the national stock exchanges of Bahrain, Egypt, Kuwait, Morocco, Oman, Saudi Arabia, Turkey, and UAE over the period from 2014 to 2018. The findings clearly unveil that not all female directors are equally influential to sustainability performance by considering their human capital profiles that significantly determine their decisions. Further, we found that female directors with advanced education and social engagement background are positively associated with sustainability performance. Our study has important implications for companies and policymakers. Companies should pay attention to experiences, educational levels, and backgrounds of female directors based on the assumption that human capital profiles of female directors may influence the board effectiveness. Policymakers should also play an active role in promotion gender diversity on regional boards by introducing initiatives that provide more support for qualified women's representation on boards to ameliorate corporate sustainability performance. This empirical study extends the literature on the impact of female director categories on sustainability performance by going beyond the taxonomy of female directors (i.e., independent/nonindependent female directors). We offer clear evidence that not all types of female directors have an impact on sustainability performance by considering their human capital profiles which significantly determine their cognitive abilities.

Date: 2022
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https://doi.org/10.1002/mde.3503

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:43:y:2022:i:6:p:1980-2002

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