Women on Boards, Sustainability Reporting and Firm Performance

Purpose – As pressures mount for women directors on corporate boards (WDOCB) from different stakeholders, companies become more interested in finding out how WDOCB impact sustainability disclosure. The purpose of this paper is to investigate the effect of gender diverse boards on the association between sustainability reporting and shareholders' welfare. Design/methodology/approach - This paper examines the implications of women on board for firm-related factors, particularly environmental, social and governance (ESG) disclosure and firm performance. The firms studied are all listed in the FTSE 350 index between 2007 and 2012. We use Bloomberg social disclosure score and apply panel data through a regression model. Findings - The results reveal that the presence of women on the board of directors favorably influence on firm's risk and performance through promoting firm's investment in effectual social engagements and reporting on them. The desirable effect of WDOCB on the ESG-performance relationship leads to increased risk-adjusted and buy-and-hold abnormal returns and reduced firm risks, measured by both volatility of returns and systematic risk. Originality/value - The research contributes to the literature on the relationship between women participation on corporate boards and firm's good citizenship and enhanced shareholders' welfare. The empirical findings contribute to providing statistical and economical validity to the U.K corporate governance code 2014 recommendation on the importance of board gender diversity for effective board functioning