Board of directors, gender diversity and monitoring

Main Article Content

Camila de Araújo Fernandes
https://orcid.org/0000-0002-5148-4549
Márcio André Veras Machado
https://orcid.org/0000-0003-2635-5240

Abstract

This paper aimed to investigate whether gender diversity in the board affects the effectiveness of monitoring, in order to reduce the total and variable remuneration of executives, the practice of earnings management
and the sensitivity of CEO turnover to the performance of Brazilian companies. We analyzed 199 companies listed on B3 between 2011 and 2018. The results indicate that gender diversity on the board has a negative effect on the total and variable remuneration of executives and the participation of 11% to 20% of women on the board has a negative effect on the earnings management. Although it has no direct effect on the probability of CEO turnover, the gender diversity takes away the explanatory power of the ROA. We can understand that gender diversity on board of directors improves the effectiveness of the monitoring
functions investigated, although this is an overdue effect when other governance proxies are considered.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

Article Details

How to Cite
FERNANDES, C. de A.; MACHADO, M. A. V. Board of directors, gender diversity and monitoring . RAE - Revista de Administracao de Empresas , [S. l.], v. 63, n. 3, p. e2021–0753, 2023. DOI: 10.1590/S0034-759020230303. Disponível em: https://periodicos.fgv.br/rae/article/view/89387. Acesso em: 16 apr. 2024.
Section
Articles

References

Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309. https://doi.org/10.1016/j.jfineco.2008.10.007

Almor, T., Bazel-Shoham, O., & Lee, S. M. (2019). The dual effect of board gender diversity on R&D investments. Long Range Planning, 50(3), 1-23. https://doi.org/10.1016/j.lrp.2019.05.004

Al-Shaer, H., & Harakeh, M. (2020). Gender differences in executive compensation on British corporate boards: The role of conditional conservatism. The International Journal of Accounting, 55(1), 1-48. https://doi.org/10.1142/S109440602050002X

Azeez, H. A. R. Al, Sukoharsono, E. G., & Andayani, W. (2019). The impact of board characteristics on earnings management in the international oil and gas corporations. Academy of Accounting and Financial Studies Journal, 23(1), 1-26. https://encurtador.com.br/cfqxJ

Baixauli-Soler, J. S., Lucas-Perez, M. E., Martin-Ugedo, J. F., Minguez-Vera, A., & Sanchez-Marin, G. (2016). Executive directors' compensation and monitoring: The influence of gender diversity on Spanish boards. Journal of Business Economics and Management, 17(6), 1133-1154. https://doi.org/10.3846/16111699.2014.969767

Baker, H. K., Pandey, N., Kumar, S., & Haldar, A. (2020). A bibliometric analysis of board diversity: Current status, development, and future research directions. Journal of Business Research, 108, 232-246. https://doi.org/10.1016/j.jbusres.2019.11.025

Bloomberg Brasil. (2020). InfoMoney. Fundo liderado por mulheres aposta em reformas ESG em emergentes. https://www.infomoney.com.br/onde-investir/fundo-liderado-por-mulheres-aposta-em-reformas-esg-em-emergentes/

Buchwald, A., & Hottenrott, H. (2019). Women on the board and executive tenure. Managerial and Decision Economics, 40(7), 741-760. https://doi.org/10.1002/mde.3028

Bugeja, M., Matolcsy, Z., & Spiropoulos, H. (2016). The association between gender-diverse compensation committees and CEO compensation. Journal of Business Ethics, 139(2), 375-390. https://doi.org/10.1007/s10551-015-2660-y

Campbell, K., & Mínguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83(3), 435-451. https://doi.org/10.1007/s10551-007-9630-y

Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. Financial Review, 38(1), 33-53. https://doi.org/10.1111/1540-6288.00034

Costa, L., Sampaio, J. D. O., & Flores, E. S. (2019). Diversidade de gênero nos conselhos administrativos e sua relação com desempenho e risco financeiro nas empresas familiares. Revista de Administração Contemporânea, 23, 721-738. https://doi.org/10.1590/1982-7849rac2019180327

Cumming, D., Leung, T. Y., & Rui, O. (2015). Gender diversity and securities fraud. Academy of Management Journal, 58(5), 1572-1593. https://doi.org/10.5465/amj.2013.0750

Dani, A. C., Picolo, J. D., & Klann, R. C. (2019). Gender influence, social responsibility and governance in performance. RAUSP Management Journal, 54(2), 154-177. https://doi.org/10.1108/RAUSP-07-2018-0041

Elghuweel, M. I., Ntim, C. G., Opong, K. K., & Avison, L. (2017). Corporate governance, Islamic governance and earnings management in Oman: A new empirical insights from a behavioural theoretical framework. Journal of Accounting in Emerging Economies, 7(2), 190-224. https://doi.org/10.1108/JAEE-09-2015-0064

Faleye, O., Hoitash, R., & Hoitash, U. (2011). The costs of intense board monitoring. Journal of Financial Economics, 101(1), 160-181. https://doi.org/10.1016/j.jfineco.2011.02.010

Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law and Economics, 26(2), 327-349. https://doi.org/10.1086/467038

García-Izquierdo, A. L., Fernández-Méndez, C., & Arrondo-García, R. (2018). Gender diversity on boards of directors and remuneration committees: The influence on listed companies in Spain. Frontiers in Psychology, 9, 1351. https://doi.org/10.3389/fpsyg.2018.01351

Gul, F. A., Srinidhi, B., & Ng, A. C. (2011). Does board gender diversity improve the informativeness of stock prices? Journal of Accounting and Economics, 51(3), 314-338. https://doi.org/10.1016/j.jacceco.2011.01.005

Harakeh, M., El-Gammal, W., & Matar, G. (2019). Female directors, earnings management, and CEO incentive compensation: UK evidence. Research in International Business and Finance, 50, 153-170. https://doi.org/10.1016/j.ribaf.2019.05.001

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405X(76)90026-X

Kim, O., Kuang, Y. F., & Qin, B. (2020). Female representation on boards and CEO performance‐induced turnover: Evidence from Russia. Corporate Governance: An International Review, 28(3), 235-260. https://doi.org/10.1111/corg.12316

Kirsch, A. (2018). The gender composition of corporate boards: A review and research agenda. The Leadership Quarterly, 29(2), 346-364. https://doi.org/10.1016/j.leaqua.2017.06.001

Konrad, A. M., Kramer, V., & Erkut, S. (2008). The impact of three or more women on corporate boards. Organizational Dynamics, 37(2), 145-164. https://doi.org/10.1016/j.orgdyn.2008.02.005

Levi, M., Li, K., & Zhang, F. (2014). Director gender and mergers and acquisitions. Journal of Corporate Finance, 28, 185-200. https://doi.org/10.1016/j.jcorpfin.2013.11.005

Li, N., & Wahid, A. S. (2018). Director tenure diversity and board monitoring effectiveness. Contemporary Accounting Research, 35(3), 1363-1394. https://doi.org/10.1111/1911-3846.12332

Pucheta Martínez, M. C., Bel Oms, I., & Olcina Sempere, G. (2017). Is board gender diversity a driver of CEO compensation? Examining the leadership style of institutional women directors. Asian Women, 33(4), 55-80. https://doi.org/10.14431/aw.2017.12.33.4.55

Nisiyama, E. K., & Nakamura, W. T. (2018). Diversidade do conselho de administração e a estrutura de capital. RAE-Revista de Administração de Empresas, 58, 551-563. https://doi.org/10.1590/S0034-759020180604

Pae, J. (2005). Expected accrual models: The impact of operating cash flows and reversals of accruals. Review of Quantitative Finance and Accounting, 24(1), 5-22. https://doi.org/10.1007/s11156-005-5324-7

Pavlović, V., Knežević, G., & Bojičić, R. (2018). Board gender diversity and earnings management in agricultural sector: Does it have any influence. Custos e Agronegócio, 14(2), 340-363. http://www.custoseagronegocioonline.com.br/numero2v14/OK%2016%20earnings.pdf

Prudêncio, P., Forte, H., Crisóstomo, V., & Vasconcelos, A. (2021). Efeito da diversidade do conselho de administração e da diretoria executiva na responsabilidade social corporativa. BBR. Brazilian Business Review, 18, 118-139. http://dx.doi.org/10.15728/bbr.2021.18.2.1

Saona, P., Muro, L., Martín, P. S., & Baier-Fuentes, H. (2019). Diversity and its impact on earnings management: An empirical analysis for select European firms. Technological and Economic Development of Economy, 25(4), 634-663. https://doi.org/10.3846/tede.2019.9381

Sarhan, A. A., Ntim, C. G., & Al‐Najjar, B. (2019). Board diversity, corporate governance, corporate performance, and executive pay. International Journal of Finance & Economics, 24(2), 761-786. https://doi.org/10.1002/ijfe.1690

Silva, A. L. C., & Margem, H. (2015). Mulheres em cargos de alta administração afetam o valor e desempenho das empresas brasileiras? Brazilian Review of Finance, 13(1), 103-133. https://doi.org/10.12660/rbfin.v13n1.2015.35116

Silveira, A., & Donaggio, A. (2020). A importância da diversidade de gênero nos conselhos de administração para a promoção da responsabilidade social corporativa. DESC - Direito, Economia e Sociedade Contemporânea, 2(2), 11-42. https://doi.org/10.33389/desc.v2n2.2019.p11-42

Sutto, S. (2020). XP Inc. se compromete a ter 50% de mulheres em todos os níveis hierárquicos até 2025. InfoMoney.https://www.infomoney.com.br/carreira/xp-inc-se-compromete-a-ter-50-de-mulheres-em-seu-quadro-de-funcionarios-ate-2025/

Usman, M., Zhang, J., Wang, F., Sun, J., & Makki, M. A. M. (2018). Gender diversity in compensation committees and CEO pay: Evidence from China. Management Decision, 56(5), 1065-1087. https://doi.org/10.1108/MD-09-2017-0815

World Economic Forum. (2020). Global Gender Gap Report 2020. http://www3.weforum.org/docs/WEF_GGGR_2020.pdf

Zalata, A. M., Ntim, C. G., Choudhry, T., Hassanein, A., & Elzahar, H. (2019). Female directors and managerial opportunism: Monitoring versus advisory female directors. The Leadership Quarterly, 30(5), 1-16. https://doi.org/10.1016/j.leaqua.2019.101309