Gender diversity on the board of directors and its impact on the Palestinian financial performance of the firm

Abstract

This study aims to examine the impact of gender diversity in the Board of Directors (BOD) on the firm performance—return of assets (ROA) and return of equity (ROE)—using a sample of Palestinian non-financial companies for the period 2008–2015. Gender diversity was measured as a percentage of women in the BOD, and dummy variable for the existence of at least one woman in the BOD. The study employed method of two-stage least squares (2SLS) to address endogeneity issues in the relationship between gender diversity and company performance. The findings show that women still exist modestly in the BOD, women exist more in the BOD of industrial firms than in the BOD of service firms. Furthermore, firms with at least one woman in the BOD have a large debt ratio, independence of BOD, better ROA performance, less size, and no difference in BOD size. The results of 2sls show that gender diversity has a positive and statistically significant impact on firm performance.

Keywords

• board of directors
• gender diversity
• palestine
• financial performance
• corporate governance