Women on board and firm financial performance

Women On Board and Firm Financial Performance

Agency theory :

the agency theory (Jensen and Meckling, 1976) which argues that the diversity of directors would strengthen the role of the board in its search for oversight and control of leaders, we will consider the diversity of directors as a positive factor that can influence corporate governance. We try to understand the links between diversity of board members and the quality of dissemination of accounting and financial information.

This theory postulates that the function of the board of directors is to solve the problems of agencies between the managers and the shareholders. Therefore, diversity directors should act independently of the majority, and thus provide more informed control, which would contribute to better control of shareholder interests (Dewatripont et al 1999, Westphal and Milton 2000).

The agency theory confers on the board of directors a function of control and

supervision. This requires the appointment of qualified, independent and specialist directors

in control (Bathala and Rao, 1995).

Several research leads to the conclusion that makes diversity of advice

a necessary condition to ensure its control function.

According to Carter et al. (2003), Diversity Increases Board Independence and Activism

administration, promotes procedural justice by ensuring direct representation of

interests of shareholders and other stakeholders in the decision-making process

of the company (Luoma and Goodstein, 1999).

In this context, Daily et al. (1999) claim the improvement of the control role in

boards of directors with significant gender diversity. Similarly,

Kesner (1988) finds that women are more likely to report

committees of the Board, namely, the Audit Committee, the Compensation Committee and the

nomination committee.

The improvement of the disciplinary role allows the reduction of agency costs. By using two

proxy for measuring this variable (the free cash flow and the dividend distribution ratio),

Jurkus et al. (2010) find a significantly negative relationship between agency costs

and gender diversity in boards of directors and those for companies with

a weak external governance structure.

In this context, gender diverse boards act as a more effective control, as a larger range of views and points of view can arise and therefore increase board independence (Reguera-Alvarado et al., 2015). As a result, gender diversity within a board can be a mechanism that reduces the costs associated with agency problems (Reguera-Alvarado et al., 2015).

Stewardship theory:

Proponents of the council's monist structure base themselves on the assumptions of the stewardship theory; they consider that the leader is worthy of trust and acts in the interest of his business.

The Stewardship Theory tries to reconsider the opportunism hypothesis that underlies most of the work in the area of ​​governance. It has its source in psychology and sociology and "defines situations in which managers not only pursue their own interests, but rather act as stewards whose objectives coincide with those of their constituents"

(Davis et al., 1997, p 21, free translation).

Stewardship theory proposes a modeling of human behavior in which the individual behaves as a steward who derives greater utility from organizational and cooperative behavior than from individualistic and selfish behavior. In this perspective, even when the interests of the intendant and his principal do not coincide, the intendant gives more value Cooperation and defection (Davis et al., here take up the terms of game theory).

The theory of stewardship "makes the assumption of a strong relationship between the success of the organization and the satisfaction of constituents. An intendant protects and maximizes shareholder wealth by contributing to the firm's performance because by doing so, it maximizes its utility function. [...] A steward who is successful at improving the performance of the organization generally meets most groups, because most stakeholders see their interests better served if organizational wealth increases.

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