Content area
Full text
Abstract
Board gender diversity refers to inclusion of women directors on corporate boards. The Indian law mandated public listed companies to have at least one women director on their board. The paper examines the issue whether gender diversity on the boards of public sector banks results in better financial performance or not. It studies correlation between relevant variables for five year data and reveals that in public sector banks in India, there is weak negative correlation. The finding encourages bank managements to compose bank boards in a cohesive and broad based composition with talent drawn from areas that will serve overall growth and performance of such entities.
Introduction
Board decisions contribute profoundly to the growth and prosperity of a corporate entity. Composition of board of directors is a critical factor in decision making by the board. A well balanced and broad based board is a prerequisite for effectiveness of board. A board composed of talented people possessing a variety of competencies that will subserve the overall interests of company is certainly the most desired from the viewpoint of sound corporate governance. Companies appoint independent directors on their boards to foster better corporate governance. Board diversity has now become a central issue in most jurisdictions. This also includes gender diversity which refers to inclusion of women directors on corporate boards. Diverse boards are considered to be more effective as it leads to integration of many disparate views that can add value to board deliberations and decision making. Most countries have made provision for inclusion of women directors through voluntary codes or legislative measures.
Issues have been raised whether the number of women directors help in enhancing performance of companies. There has been plethora of studies outside India in this regard for corporates and also banks in particular. This paper examines the aspect in the context of public sector banks in India.
Indian perspective on Women Directors
India did not have any provision for women representation on corporate boards till 2013. However, many companies had been nominating women as directors on their own. There has not been any dearth of professional women eligible for board positions but it was merely a matter of mindset that men dominated Indian boards. The position changed in 2013 when the...