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<p>This study examines the relationship between gender board diversity and financial performance using a comprehensive dataset of 2,341 Indian listed companies from 2009 to 2023. Exploiting India’s 2013 mandatory gender quota requiring at least one woman director on corporate boards, we employ a difference-in-differences approach to identify causal effects. Our findings reveal a positive and significant relationship between gender diversity and financial performance, with firms experiencing a 4.2% increase in ROA and 3.8% increase in ROE following compliance with the mandate. The effects are particularly pronounced for family-controlled firms, technology companies, and firms with previously all-male boards. Cross-sectional analysis reveals that benefits are strongest when women directors possess relevant expertise and independence. We find evidence supporting both human capital and signaling theories, with improved board monitoring and enhanced stakeholder relationships serving as key transmission mechanisms. These results contribute to the ongoing debate on mandatory diversity policies and provide valuable insights for emerging market contexts where traditional governance structures predominate.</p>

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Gender board diversity and financial performance: evidence from India’s mandatory gender quota

  • 期刊论文

  • 发表日期：

    2026年1月27日

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  • Ameya Patil,
  • Rakesh Yadav

摘要

This study examines the relationship between gender board diversity and financial performance using a comprehensive dataset of 2,341 Indian listed companies from 2009 to 2023. Exploiting India’s 2013 mandatory gender quota requiring at least one woman director on corporate boards, we employ a difference-in-differences approach to identify causal effects. Our findings reveal a positive and significant relationship between gender diversity and financial performance, with firms experiencing a 4.2% increase in ROA and 3.8% increase in ROE following compliance with the mandate. The effects are particularly pronounced for family-controlled firms, technology companies, and firms with previously all-male boards. Cross-sectional analysis reveals that benefits are strongest when women directors possess relevant expertise and independence. We find evidence supporting both human capital and signaling theories, with improved board monitoring and enhanced stakeholder relationships serving as key transmission mechanisms. These results contribute to the ongoing debate on mandatory diversity policies and provide valuable insights for emerging market contexts where traditional governance structures predominate.