Mediating role of financial sustainability between board diversity and firms’ resilience: evidence from Saudi listed firms

This paper assesses the effect of board diversity on resilience with a mediating role of financial sustainability. The research sampled data from 166 Saudi companies from 2017 to 2023 and analysed it using a fixed effect framework. The findings showed that board nationality diversity and audit committee expertise may provide greater firm resilience. Firm size, leverage, board independence and government ownership were also significant determinants of firm resilience. Further, the analysis reveals that financial sustainability exerts a strong mediation effect. These results support the agency, resource dependence and signalling theories that predicted that boardroom diversity might promote monitoring, provide access to greater talent, enhance the company’s ability to navigate disruptions and maintain resilience in the face of adversity. The policy implication of the empirical findings is that companies can strengthen their ability to withstand and recover from disruptions by setting up diverse boards of directors. Also, policymakers and regulators can shape regulatory frameworks to encourage good governance practices through board diversity dynamics. Moreover, the study outcome provides a broader perspective that can guide stakeholders to make informed decisions that may strengthen organisational resilience and promote long-term corporate stability.