The Relationship Between Board Gender Diversity, Firm Life Cycle and Corporate Risk-taking

Abstract

This study examines the impact of board gender diversity on corporate risk-taking, moderated by the firm life cycle stages. Data from 200 non-financial firms listed on the Pakistan Stock Exchange (2018–2022) were analyzed using the system generalized method of moments. Corporate risk-taking, the dependent, was measured using systematic risk and total-risk proxies. Results showed that board gender diversity had an insignificant effect, firm life cycle had a negative significant impact, while the interaction term (board gender diversity and firm life cycle) showed a positively significant impact on risk-taking measured by total risk. In contrast, both factors, along with their interaction, positively influenced risk-taking when assessed through systematic risk. The study further segmented the firm life cycle into five distinct stages, finding that the impact of board gender diversity on risk-taking varied across stages. For instance, at the introduction and maturity stages, board gender diversity positively affected risk-taking for both proxies. However, at the growth and decline stages, its impact was insignificant. These findings suggest variability in the relationship between board gender diversity and risk-taking, potentially influenced by the choice of risk proxies. Theoretically, this study contributes to the body of knowledge on how a firm’s life cycle and board gender diversity influence corporate risk-taking. This study’s insight also holds significant implications for corporate governance and policymaking because, contrary to popular belief, the findings suggest that board gender diversity does not uniformly reduce risk-taking; instead, its impact varies with the firm’s life cycle stage.