Women on boardroom: Does it create risk?

Abstract

© 2017 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. This study examines the impact of the women existence on corporate board. It is believed that the existence of women on board adds more value to the company as more women bring different perspectives on the decision-making process and the company’s strategic plans. Using Islamic listed-firms in the Indonesian Stock exchange, this study employs 7-year panel data comprising 840 observations from 2009 to 2015 quarterly data of 30 listed-firms that comply with Islamic law. Generalized Least Square is employed in this study and the results revealed that the presence of female CEOs has lowered the firm’s risk for all risk proxies. Female CEOs having a higher academic qualification, overseas qualification, and business degree tends to lower the firm’s risk. The result also indicates that the younger the age of female CEOs and the longer tenure of the female CEOs, the lower the firm’s risk. Furthermore, more female directors on boardroom have a significant impact on firm’s risk as the higher the number of female directors the lower the firm’s risk (CR and FCF). In addition, female chief financial officer tends to lower the firm’s risk as they are believed to be more conservative in dealing with the financial issues.