Corporate Governance and Firm Performance: The Case of Gender Diversity in Indonesia

Document Type : Research Paper

Authors

1 Department of Accounting, Faculty of Economics and Business, Universitas Negeri Semarang, Indonesia

2 Department of Islamic economics and finance, Faculty of Economics and Business, Universitas Negeri Semarang, Indonesia

3 Department of Management, Faculty of Economics and Business, Universitas Negeri Semarang, Indonesia

10.22059/ijms.2024.374159.676623

Abstract

Regulators and researchers encourage the creation of increased opportunities for women to sit in the boardrooms because gender diversity increases the effectiveness of corporate governance. However, recent research reports that the effectiveness of gender diversity in improving company performance has mixed results. This research aims to prove the influence of gender diversity of the directors and Board of Commissioners (BOC) in the context of firm performance in Indonesia. We used 96 banks during the 2009–2021 period. We found that the gender diversity of the BOCs positively influences financial performance. In contrast, director gender diversity does not affect performance. The findings exhibit consistency with three measures of accounting-based financial performance of banks: return on assets (ROA), return on equity (ROE), and one market-based performance (price-earnings ratio-PER). However, we found that BOC gender diversity has the impact of reducing PER. Our study recommends that regulators encourage banks to appoint women's BOC through bank regulations to increase women's participation as BOC members.

Keywords

Main Subjects

References

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Interdisciplinary Journal of Management Studies (Formerly known as Iranian Journal of Management Studies)
Volume 18, Issue 1
January 2025
Pages 195-208

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