The Moderating Role of Board Gender Diversity in ESG Performance and Corporate Cash Holdings: A Two‐Tier Perspective

ABSTRACT This study examines whether board gender diversity strengthens the effect of environmental, social, and governance (ESG) performance on corporate cash holdings (CCH) in Indonesian firms. Board gender diversity is operationalized using two alternative measures: the percentage of women on the board (WoB) and the Blau index. As an additional analysis, the study further decomposes the percentage‐based measure into women on commissioners (WoC) and women on directors (WoD) to trace the mechanism underlying this moderating effect within Indonesia's two‐tier governance system. Using secondary data from annual reports and the Bloomberg database, the study analyzes 645 firm‐year observations from 100 companies over the 2017–2023 period. The findings show that ESG performance positively influences CCH. Board gender diversity significantly reinforces this relationship, consistently across both the WoB and Blau index measures. The additional analysis further reveals that women on directors (WoD) strengthen this relationship, while women on commissioners (WoC) do not demonstrate a moderating effect. This study contributes originality by examining the moderating role of board gender diversity across two alternative operationalizations and by leveraging Indonesia's two‐tier governance system to trace whether this effect originates from supervisory or managerial board representation, extending prior research that has not distinguished the gender composition of supervisory boards.