Females on corporate boards and firm financial performance: New evidence from Nigeria

Abstract

The board is the most influential decision-making organ of any modern firm with wide-ranging and high-impact responsibilities from strategy setting, governance, and to the appointment of members to the firm’s top leadership. The size or complexity of many modern firms places a demand on high-level expertise and diversity on corporate boards. A critical dimension of board diversity is gender. The aim of this study is to investigate the influence of ‘females on board’ on the financial performance of listed firms in Nigeria. The research intends to show or investigate the impact of female presence on corporate boards on financial performance. The research utilizes the panel study designs while the longitudinal survey study method was used for the collection of data. The research depends on secondary sources of data to collate figures for the variables and embrace the purposive sampling procedure. The ideal population for the research comprises all manufacturing firms registered with the Nigeria Stock Exchange (NSE). The specimen size for the research was 20 manufacturing firms. The data were collated from secondary sources of the annual report and accounts, fact books, and publications of the Nigerian Stock Exchange (NSE). The Hausman test was carried out to ascertain whether to apply Fixed Effects or Random Effects regression. It tested the null proposition to certify that the coefficients predicted by the random effects approximator are one and the same as the coefficients predicted by the unswerving fixed effects approximator. The empirical results suggest that the presence of female directors, as well as their proportion, exerts a favorable impact on financial performance measured by return on assets (ROA). The control factors, business size and company age exert a positive and negative effect on financial performance, respectively. The research proposes that managerial and legislative measures be taken to achieve a healthy gender balance on corporate boards in Nigeria.