Board Gender Diversity and Firm Value: A Case of PSX

Abstract

The effect that manager diversity has on a company's worth is examined in this study. Our research used information from 2087 observations covering 226 non-financial companies listed on the Pakistan Stock Exchange (PSX). Using panel data regression analysis and testing the results for robustness using the Blau and Shannon indices, we discovered that the presence of female directors on a business's board adds value to the company. Furthermore, our research, utilizing the critical mass theory's aspect, indicates that the impact of women's representation increases when it reaches a critical mass. This finding corroborates the critical mass theory within our sample of firms. We endorse the compulsory inclusion of women executives on the firm's boards as mandated by governance regulations. The study is consistent with legislative initiatives to improve corporate governance procedures to safeguard shareholders. Our findings also give policymakers direction by showing how crucial it is to support women's professional development and career advancement to increase their meaningful participation in business decision-making processes. To sum up, we argue that gender diversity reduces agency conflicts and increases company value, making it a helpful instrument in corporate governance.