Influence of gender and age diversity of boards on financial and market performance of banks

Abstract

This paper seeks to explore the impact of gender and age diversity within the board of directors, as well as the appointment of a female CEO, on the return of assets (ROA) and Tobin Q of banks on a global scale. The study is motivated by the growing interest in how the quality of human capital within boardrooms affects the performance of banks, as well as the conflicting results of previous research on this topic. To conduct the study, panel regressions with fixed effects were employed as the research method. The sample consisted of 470 banks, including 146 banks from emerging markets, and data was collected from 2013 to 2023. The findings revealed that gender diversity within the board had a significant and negative impact on banks’ Tobin’s Q. Additionally, there was no significant relationship found between gender diversity and banks’ ROA, as well as between age diversity and both banks’ ROA and Tobin’s Q. The appointment of a female CEO harmed banks’ Tobin Q in emerging markets, but no significant influence was found on ROA and Tobin Q in banks in the developed world. As a result, it appears that banks’ investors do not view gender diversity as separate from other human capital issues within the boardrooms and may not derive significant financial benefits from gender and age diversity. These findings can be valuable for strategic controlling in evaluating the impact of human capital on the boards and executive branches of financial institutions.