Gender diversity in the board room and sustainable growth rate: the moderating role of family ownership

Abstract

ABSTRACT This study examines the impact of gender diversity on sustainability growth, and moderating role of family ownership in an emerging economy, Pakistan. We employed 3730 firm-year observations, comprising of 307 non-financial firms listed on Pakistan Stock Exchange, over a period 2008–2020. Using framework of agency theory, resource dependence theory and social identity theory, we report that gender diversity results in higher sustainable growth in our sample firms. Further, our results indicate that due to strong identification of family owners with their firms, their presence positively moderates this relationship. Overall, we report that despite of a weak corporate governance mechanism, the presence of female directors and family owners results in higher firm growth and low agency conflicts, which serve as positive signals for the investors. Our study provides empirical support to mandatory appointment of female directors on boards and urge the policymakers to focus on capacity building of female workforce.