WOMEN DIRECTORS AND THEIR IMPACT ON FINANCIAL PERFORMANCE OF FIRMS IN SRI LANKA

Abstract

Many studies and ongoing debates address the impact of women directors on financial performance of firms in developed economies. On the contrary, lack of knowledge and gaps in literature prevail with regards to this discussion which focus the developing economies. This is a case study based in Sri Lanka which investigates the impact of women directors on the financial performance. Further, this study extends the existing literature on gender diversified boards by providing new evidence on the impact of women directors on financial performance of listed companies in Sri Lanka. Data analysis is based on panel regression techniques which covers all the listed firms totalling 281 during the seven year period 2012-2018. Moreover, to review the impact caused by women directors, a dependent variable which determines financial performance of firm was used in this study. The study found out that women directors have a positive and significant impact on firm financial performance. Furthermore, leverage and firm age have a negative impact on firm financial performance. The study findings provide guidance to Sri Lankan policy makers and regulators to implement gender inclusive policies and also to introduce quota legislative strategies enabling equal opportunities regardless of gender-based disparities. Sri Lanka is making strong efforts to return to normalcy reviving its economic growth and business sector affected by Easter bombings in 2019 as well as the global pandemic coronavirus COVID-19 in 2020. Therefore, the findings of this paper will be useful to understand the role of women directors on the financial performance of firms.