CORPORATE GOVERNANCE: THE IMPACT OF GENDER DIVERSITY AND CORPORATE GOVERNANCE INDEX ON FIRM PERFORMANCE

Abstract

Studies conducted in the United Kingdom, Unites States as well as some other European countries have received mixed findings on the relationship between gender diversity and firm performance. Little or no research has been done in this area in the Asian context. In addition, no study has been conducted to see the relationship between corporate governance indexes and firm performance. This study therefore intends to look at these two new developments in the area of corporate governance research: the respective effects of gender diversity and corporate governance composite index on firm performance in the Singapore context. Through the employment of three different measures of firm performance (return on asset, return on equity and Tobin’s Q) using a sample of 528 Singapore publicly-listed companies, this study examines whether (1) the firms’ and boards’ characteristics contribute to the presence of female directors, (2) whether female directors have an impact on the firms’ performance and lastly (3) whether there is any relationship between corporate governance index and firm performance. The study shows that there is no relationship between the presence of female director and firm performance. The findings of the study also show that Governance and Transparency Index has a strong relationship with firm performance. The latter provides support that compliance with the Singapore Code of Governance helps firms to yield better returns.