Boardroom gender diversity and corporate financial decisions: Evidence from nonfinancial listed firms of Pakistan

In an era focused on the evolving perspectives of gender equality, this study investigates the effect of boardroom gender diversity on key corporate decisions and their outcomes. Tobit and logit regression and generalized method of moments (GMM) are used to study the impact of boardroom gender diversity on firm efficiency, dividend payout, leverage, profitability and insolvency. The underlying study estimates the efficiency scores of nonfinancial firms using data envelopment analysis and insolvency using the Altman Z-score emerging market model. The data from 261 listed firms in the nonfinancial sector of the Pakistan Stock Exchange over five years (from 2017 to 2021) are employed for hypothesis testing. The findings that a gender diverse board with female representation improves the firm’s efficiency are of interest to policymakers and shareholders. The study highlights that regulators in the developing economies should devise policies to increase the female representations in the corporate boards. The findings suggest that the presence of female in the board minimizes agency issues, as the strategic choices of female members are inclined primarily toward the increase in shareholder value. Female board members are more risk-averse, better decision makers and focus on improving the firm’s value. This study is a novel attempt to estimate the role of gender in the efficiency of listed firms.