Breaking the Glass Ceiling: The Impact of Board Gender Diversity on Firm Financial Performance in Sri Lanka

Abstract

The purpose of this study is to examine the influence of board gender diversity on the financial performance of firms in Sri Lanka. While extensive research has been conducted in developed countries, this study addresses the gap in literature by examining how cultural and economic differences influence the relationship between gender diversity and corporate performance. Understanding this relationship in developing countries is crucial for shaping inclusive corporate governance policies and promoting sustainable development in diverse economic contexts. This study employs secondary data from the annual reports of listed companies over the period 2012–2022, using panel regression and multiple linear regression models to explore the relationship between board gender diversity and firm financial performance. The findings reveal that, despite Sri Lanka's corporate boards being predominantly male-dominated, the inclusion of female directors is positively associated with improved financial performance. This is evident through factors such as the presence of female directors, female chairpersons, board size, CEO duality and firm age. In contrast, independent directors and leverage are found to have a negative impact on performance. The study provides valuable insights for researchers, investors and policymakers, offering a roadmap for enhancing gender diversity in Sri Lanka's corporate governance and promoting sustainable development.