Dottorato in MERCATI E ISTITUZIONI PER LO SVILUPPO
E L'INNOVAZIONE

Titolo della tesi: Essay on Board Diversity and Firm Innovation: Female Directors on Board, their Specific Roles, Statuary and Demographic Attributes and Implementation of Kanter’s Theory on Firm Innovation

Recently, a growing number of academics have looked into whether female directors are effectively performing their governance monitoring roles because of two leading reasons. The first reason is that the wake of recent business scandals and financial crises has highlighted the vital issue of whether the situation would have been different if females worldwide ran more companies. The second reason is that regulators and policymakers worldwide are attempting to raise the proportion of women females on top management teams by persuasion or by implementing legal quotas. As a result of this increased focus, examining the female directors' role in the corporate governance framework will add to the worldwide discussion over whether female directors should be included on corporate top management teams on a voluntary or mandated basis. Moving beyond previous research findings on the impact of women directors in corporate governance, the essence of this study is to investigate the influence of board gender diversity on firms’ innovation. This study emphasizes an overall sample size of Chinese A-share firms listed on the (SZSE) Shenzhen Stock Exchange and (SSE) Shanghai Stock Exchange from 2008-2020. For this, we have used different variables in every aspect to measure the influence of gender diversity on firm innovation. This study used the fundamental fixed effect method as the primary methodology. Besides this, various specification models were also used, e.g., propensity score matching (PSM), BLAU index, and SHANNON index. Firstly, our study shows a significant positive relationship between the participation/presence of female directors on boards and firm innovation after controlling for endogeneity and other relevant variables (e.g., the board, the firm, and the industry). Additionally, to promote firm innovation, we look into which of the two primary board of directors roles—advisory versus monitoring—is best performed by female directors. We find evidence suggesting that female directors holding monitoring roles facilitate firm innovation, as measured by research, development, and patents. More particular, our study highlights the effect of advising and monitoring roles that female directors perform in the boardroom. Our research expands on this approach and goes beyond the previous work that has been done on gender diversity by investigating the means through which female directors affect firm innovation. We consider statutory diversity (board independence and chairperson) and demographic diversity (education, nationality, and busyness). The findings demonstrate that firms with female independent directors, female chairpersons and their business expertise facilitate firm innovation, while female directors' nationality and busyness negatively affect innovation performance. Finally, our thesis also provides novel evidence by investigating whether the role of board gender diversity in promoting innovation differentiates with institutional contingencies (developed v/s under-developed regions, state-owned v/s non-state-owned firms, cross-listed v/s non-cross listed firms, and family v/s non-family firms) of China or not. In addition, gender-diverse boards promoted firm innovation in state-owned enterprises (SOEs), non-family firms, cross-listed firms, and firms in under-developed regions where agency issues are more intense by offering better monitoring roles in comparison to non-state-owned enterprises (SOEs), family firms, cross-listed firms, and firms in under-developed regions. In an additional analysis of our thesis, we examine the relationship between women on boards and firm innovation depending on group categories identified in Kanter's theory. The findings imply that tilted boards promote greater firm innovation and that when the proportion of female directors reaches the threshold of 33%, women have a positive and statistically significant impact on firm innovation. These findings support the assumptions of critical mass theory and Kanter's group categorization. Besides this, we find that gender diversity is more pertinent in facilitating innovation in female-dominated industries, not male-dominated industries. In low-tech and non-patent-intensive industries, all types of diversity facilitate innovation. It provides unique evidence to support the hypothesis that China's diverse institutional contexts contribute to its distinctive gender diversity patterns. The results of this research provide empirical credence to claims that board gender diversity is a key problem in corporate governance. The outcomes of this research suggest that female directors' participation may help strengthen governance at the firm level in emerging economies, where governance and investor protection are often weak. The findings of this research also help policymakers determine the minimum threshold quota policies required for boards to function effectively. This research, in particular, sheds new light on diversity practices and gives helpful empirical evidence for Chinese regulators. KEYWORDS: Female board directors; Board gender-diversity; Corporate governance; Ownership structure; China