Corporate Governance and Financial Performance: The Interplay of Board Gender Diversity and Intellectual Capital

Prior research has found mixed evidence regarding the relationships between board gender diversity (BGD) and firm value. Moreover, there is a lack of evidence on the channels through which BGD affects firm performance; hence, this paper tackles this issue. We aim to investigate the relationship between BGD and firm performance and to explore the mediating role of intellectual capital efficiency (ICE) in this relationship. Using a multivariate regression analysis and a sample of 4008 North American firms from 2002 to 2020 (14,382 firm-year observations), we find that gender diversity is positively related to financial performance, confirming that a diversified board improves board effectiveness and brings new resources to the firm, which allows it to improve its performance. More interestingly, the results of the Structural Equation Model (SEM) indicate that the relationship between gender diversity and performance is more pronounced with the mediating role of ICE. Our results are robust, controlling for the endogeneity and heteroscedasticity issues, with several controls for firm- and country-level characteristics, using alternative sample compositions and alternative econometric techniques, and including year, industry, country and firm-fixed effects. Interestingly, this paper shows strong evidence that the effect of BGD on firm value is more effective by incorporating the role of intellectual capital efficiency.