Board Gender Diversity and Firm Performance: An Empirical Analysis of Panel Data from Companies Listed on the Lusaka Stock Exchange

Abstract

Board diversity is one of the corporate governance mechanisms that has received greater attention in recent research studies concerned with investigating the relationships between corporate governance and firm performance. The King IV (2016) has advocated for, among other things, diversity in the composition of governing bodies for organisations. The relationship between board gender diversity and financial performance of firms listed on the Lusaka Stock Exchange in Zambia was the subject of this study. A panel data analysis approach was employed which involved cross sectional data for all listed companies on the Lusaka Stock Exchange for the period 2006 to 2016. The study used regression analysis as estimation technique to investigate the relationship between board gender diversity (surrogated by the number and proportion of females on the board of directors) and the three financial performance proxies (Return on assets (ROA), Return on equity (ROE) and Leverage). The overall findings were that board gender diversity positively affected firm performance and it explained 5%, 6% and 9% of the changes in ROA, ROE and leverage respectively. Further, the regression models explained a significant proportion of the variation in the ROA and leverage. This paper focused on Zambian companies and the findings contributed to the growing knowledge on the relationship between board gender diversity and corporate financial performance in developing and developed countries. The findings are of interest to policy makers, researchers, investors and corporate boards.