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1. Introduction
Debate on gender diversity at the corporate board level is growing in the board literature that spells out various functions of board room gender diversity. Gender-diverse boards are more efficient in monitoring of agents and ensure that firms maintain the ethical standards, thus minimizing the ineffective use of shareholders’ funds that can be misused (Galbreath, 2011). In the same vein, Adams and Ferreira (2009) suggested that women directors are not from the “old boys club” and it closely relates to the idea of independent directors. Another important feature is that women on board create value by bringing different opinion, perspective and experience to the table (Mathisen et al., 2013) which leads to better decision-making (Davies, 2011). In addition, self-evident social justice view is that a gender-diverse board is a step toward equal opportunities for females at the upper echelons of the firm (Dowling and Aribi, 2013).
Financial decisions and economic interactions involve some sort of risk-return trade-off that requires proper assessment and accordingly execution of these decisions (Shim and Siegel, 1987). Risk choices of board members are likely to shape such decisions and actions. Corporate board members have different characteristics like beliefs, personalities, gender, ethnicity, qualification, etc. These characteristics, particularly gender, may be able to explain different risk-taking choices of firms (Sila et al., 2016). The influence of women directors on firm decision-making and outcomes including firm’s risk-taking both deserve theoretical and empirical investigation, because of the emphasis being placed on board room gender diversity as a part of good corporate governance. Prior research investigations on impact of women directors on corporate outcomes have used either mixed sample, comprising non-financial firms from a large number of industries or only financial firms (Berger et al., 2014). Whether women directors have an impact on risk taking in technology firms remains an open question. Technology industries are different from others because of ongoing uncertainty, challenges and frequent changes are the special features of these industries (Gavious et al., 2012). A continuous flow of innovation is critical in technology firms to remain competitive, but innovation requires uninterrupted investments in R&D (Balkin et al., 2000) that is considered as risky investment.
Prior empirical examinations between board room gender diversity and firm risk-taking are...