The effect of female board on firm value evidence from the Asia Pacific

Abstract

This paper examines the relationship between board gender diversity and firm value of companies in the Asia-Pacific from 2011 to 2020. Fixed effects and two-stage least squares are employed to deal with endogeneity. We find that increasing female directors to the board has a positive and significant effect on firm value as measured by Tobin’s Q. The result suggests that independent directors have a positive and significant impact on firm value. However, when the board is composed of independent directors, appointing female directors decreases the firm's value owing to over monitoring. Furthermore, the positive effect of female directors appears to be diminished in countries with higher corruption environments. This may be attributable to the fact that gender diversity reduces board corruption. Overall, we suggest that the present of female directors or mandating gender quotas on board can reduce firm value in countries where corruption is high.