IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v16y2023i12p512-d1297838.html
   My bibliography  Save this article

Does the Cultural Dimension Influence the Relationship between Firm Value and Board Gender Diversity in Saudi Arabia, Mediated by ESG Scoring?

Author

Listed:
  • Laila Mohamed Alshawadfy Aladwey

    (Department of Accounting, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11432, Saudi Arabia
    Department of Accounting, Tanta University, Gharbia 31521, Egypt)

  • Raghad Abdulkarim Alsudays

    (Department of Accounting, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11432, Saudi Arabia)

Abstract

The scarcity of female directors on Saudi boards is linked to cultural and social barriers deeply rooted in traditional masculine norms. Our study investigates the mediating role of ESG scores in the relationship between board gender diversity and firm value within the Saudi context. The Structural Equation Model (SEM) was utilized based on a sample of 54 Saudi-listed financial companies on (Tadawul) during 2021–2022. The study unveiled a negative correlation between female director presence and Saudi firm value. This association is attributed to the prevailing male-dominated Saudi societal norms, where boards with more female members may hesitate to prioritize performance-driven actions due to concerns about their perceived legitimacy within traditional gender roles. Conversely, a positive correlation was observed between female director presence and ESG scores, aligning with existing research highlighting the role of board gender diversity in improving sustainability performance. The sustainability framework prevails over the influence of gender diversity, fully integrating it within the broader context of sustainability to enhance the value of Saudi companies. Our results are consistent when considering alternative measures of firm value. Our findings offer valuable insights for investors assessing board gender diversity’s impact on company value and emphasize the role of gender diversity in enhancing sustainability. They suggest that greater female representation on boards is vital for ESG score improvement, promoting sustainable initiatives and overall firm value. This calls for policymakers to promote sustainability disclosures and establish guidelines for increased female board participation, considering the absence of mandatory quotas.

Suggested Citation

  • Laila Mohamed Alshawadfy Aladwey & Raghad Abdulkarim Alsudays, 2023. "Does the Cultural Dimension Influence the Relationship between Firm Value and Board Gender Diversity in Saudi Arabia, Mediated by ESG Scoring?," JRFM, MDPI, vol. 16(12), pages 1-21, December.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:12:p:512-:d:1297838
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/16/12/512/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/16/12/512/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pascal Nguyen & Nahid Rahman & Alex Tong & Ruoyun Zhao, 2016. "Board size and firm value: evidence from Australia," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(4), pages 851-873, December.
    2. Laila Aladwey & Ahmed Diab, 2023. "The determinants and effects of the early adoption of IFRS 15:Evidence from a developing country," Cogent Business & Management, Taylor & Francis Journals, vol. 10(1), pages 2167544-216, December.
    3. Maretno Harjoto & Indrarini Laksmana, 2018. "The Impact of Corporate Social Responsibility on Risk Taking and Firm Value," Journal of Business Ethics, Springer, vol. 151(2), pages 353-373, August.
    4. Sanjukta Brahma & Chioma Nwafor & Agyenim Boateng, 2021. "Board gender diversity and firm performance: The UK evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5704-5719, October.
    5. Pallab Kumar Biswas & Larelle Chapple & Helen Roberts & Kevin Stainback, 2023. "Board Gender Diversity and Women in Senior Management," Journal of Business Ethics, Springer, vol. 182(1), pages 177-198, January.
    6. Peter Agyemang-Mintah & Hannu Schadewitz, 2019. "Gender diversity and firm value: evidence from UK financial institutions," International Journal of Accounting & Information Management, Emerald Group Publishing Limited, vol. 27(1), pages 2-26, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brogi, Marina & Lagasio, Valentina, 2022. "Better safe than sorry. Bank corporate governance, risk-taking, and performance," Finance Research Letters, Elsevier, vol. 44(C).
    2. Xiaodong Teng & Kun-Shan Wu & Lopin Kuo & Bao-Guang Chang, 2023. "Investigating the double-edged sword effect of environmental, social and governance practices on corporate risk-taking in the high-tech industry," Oeconomia Copernicana, Institute of Economic Research, vol. 14(2), pages 511-549, June.
    3. Helfaya, Akrum & Aboud, Ahmed & Amin, Essam, 2023. "An examination of corporate environmental goals disclosure, sustainability performance and firm value – An Egyptian evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).
    4. Nan Zhang & Qiaozhuan Liang & Huiying Li & Xiao Wang, 2022. "The organizational relationship–based political connection and debt financing: Evidence from Chinese private firms," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 69-105, January.
    5. Bai Xue & Zhuang Zhang & Pingli Li, 2020. "Corporate environmental performance, environmental management and firm risk," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1074-1096, March.
    6. Adam Arian & John Sands & Stuart Tooley, 2023. "Industry and Stakeholder Impacts on Corporate Social Responsibility (CSR) and Financial Performance: Consumer vs. Industrial Sectors," Sustainability, MDPI, vol. 15(16), pages 1-21, August.
    7. Hella Dellai, 2023. "Does Internal Audit Quality Improve Firm Performance? The Moderating Effect of Chief Audit Executive Gender," Information Management and Business Review, AMH International, vol. 15(2), pages 19-28.
    8. María Consuelo Pucheta‐Martínez & Inmaculada Bel‐Oms & Isabel Gallego‐Álvarez, 2023. "Corporate social responsibility reporting and capital structure: Does board gender diversity mind in such association?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1588-1600, July.
    9. Shu-Chen Hsu & Kun-Tsung Wu & Qing Wang & Yuan Chang, 2023. "Is capital structure associated with corporate social responsibility?," International Journal of Corporate Social Responsibility, Springer, vol. 8(1), pages 1-20, December.
    10. Renuka Sharma & Kiran Mehta & Archana Goel, 2023. "Non-linear relationship between board size and performance of Indian companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(4), pages 1277-1301, December.
    11. Rouine, Ibtissem & Ammari, Aymen & Bruna, Maria Giuseppina, 2022. "Nonlinear impacts of CSR performance on firm risk: New evidence using a panel smooth threshold regression," Finance Research Letters, Elsevier, vol. 47(PB).
    12. Hani Alkayed & Esam Shehadeh & Ibrahim Yousef & Khaled Hussainey, 2024. "Does a Female Director in the Boardroom Affect Sustainability Reporting in the U.S. Healthcare Industry?," JRFM, MDPI, vol. 17(2), pages 1-20, January.
    13. Shamsul Nahar Abdullah & Azbariyah Aziz & Aizulfithri Azani, 2022. "The Effect of Board Independence, Gender Diversity and Board Size on Firm Performance in Malaysia," Journal of Social Economics Research, Conscientia Beam, vol. 9(4), pages 179-192.
    14. Jing Jia & Zhongtian Li, 2022. "Corporate Environmental Performance and Financial Distress: Evidence from Australia," Australian Accounting Review, CPA Australia, vol. 32(2), pages 188-200, June.
    15. Grey, Colette & Flynn, Antoinette & Adu, Douglas A., 2024. "An examination of how executive remuneration and firm performance are influenced by Chair-CEO diversity attributes," International Review of Financial Analysis, Elsevier, vol. 94(C).
    16. D'Mello, Ranjan & Kwon, Sungjoung & Toscano, Francesca, 2024. "Corporate social responsibility and the executive-employee pay disparity," Journal of Banking & Finance, Elsevier, vol. 162(C).
    17. Garanina, Tatiana & Kim, Oksana, 2023. "The relationship between CSR disclosure and accounting conservatism: The role of state ownership," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 50(C).
    18. Giovanna Campopiano & Patricia Gabaldón & Daniela Gimenez-Jimenez, 2023. "Women Directors and Corporate Social Performance: An Integrative Review of the Literature and a Future Research Agenda," Journal of Business Ethics, Springer, vol. 182(3), pages 717-746, January.
    19. Taufik Taufik & Tertiarto Wahyudi & Agung Putra Raneo & Mu'izzuddin Mu'izzuddin & Mohamad Adam, 2018. "Do Traditional Accounting and Economic Value Added Mediate The Relationship Between Corporate Governance and Firm Value of Indonesian State-Owned Enterprises ?," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 118-126.
    20. Michael Mayberry, 2020. "Good for managers, bad for society? Causal evidence on the association between risk‐taking incentives and corporate social responsibility," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(9-10), pages 1182-1214, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:16:y:2023:i:12:p:512-:d:1297838. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.