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Women director interlocks and firm performance: Evidence from India

Author

Listed:
  • Shreya Biswas

    (Birla Institute of Technology and Science, Pilani, Hyderabad Campus)

  • Jayati Sarkar

    (Indira Gandhi Institute of Development Research)

  • Ekta Selarka

    (Madras School of Economics)

Abstract

This paper empirically examines the impact of network ties of women directors on firm value and sheds light on the unaddressed issue of whether such ties can serve as one of the channels through which women on board affect firm performance. In doing so, the study also seeks to provide a gendered perspective of the performance effects of interlocking directorates on which empirical evidence is scant. Using a panel of listed firms in India for the period 2010-2020 covering periods of pre and post institution of gender quota on company boards, our study finds that women director connectedness, as captured in select network centrality measures, has a positive and robust effect on firm value. We further find evidence that the positive relationship with firm value is driven by the information advantage and influence of women director networks. Finally, based on a director level analysis, we find that more connected women directors, including those who are independent, contribute to corporate governance through higher meeting attendance, and through their memberships in important committees. The findings of the paper highlight the unique role of women director interlocks in firm governance and performance.

Suggested Citation

  • Shreya Biswas & Jayati Sarkar & Ekta Selarka, 2023. "Women director interlocks and firm performance: Evidence from India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-016, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2023-016
    as

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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2023-016.pdf
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    References listed on IDEAS

    as
    1. Jain, Ritika, 2022. "Gender diversity, gender norms and firm performance: Evidence from India," Economic Systems, Elsevier, vol. 46(4).
    2. Helmers, Christian & Patnam, Manasa & Rau, P. Raghavendra, 2017. "Do board interlocks increase innovation? Evidence from a corporate governance reform in India," Journal of Banking & Finance, Elsevier, vol. 80(C), pages 51-70.
    3. Leuz, C & Verrecchia, RE, 2000. "The economic consequences of increased disclosure," Journal of Accounting Research, Wiley Blackwell, vol. 38, pages 91-124.
    4. Tarun Khanna & Yishay Yafeh, 2007. "Business Groups in Emerging Markets: Paragons or Parasites?," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 331-372, June.
    5. Low, Daniel C.M. & Roberts, Helen & Whiting, Rosalind H., 2015. "Board gender diversity and firm performance: Empirical evidence from Hong Kong, South Korea, Malaysia and Singapore," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 381-401.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Interlocking directors; Firm value; Woman directors; Network centrality; India; Emerging markets;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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