Does Off-board and On-board Gender Diversity Affect Financial Performance? Evidence from Deposit Money Banks in Nigeria

Corporate failures have been attributed to the board of directors. Gender diversity of the on-board and off-board directors in the firm could be a remedy for such failures. Studies have focused on gender diversity in boardrooms with few studies on the complementary effect of both on-board members and off-board members. The study, therefore, examined the effect of gender diversity of board members and non-board members on the financial performance of the Deposit Money Banks (DMBs) in Nigeria. The population for this study comprised twenty-four listed DMBs. Purposive sampling was used in this study for selecting 11 Deposit Money Banks whose stocks were actively traded on the stock market during the sample period and for which pertinent data were readily available. The study employed secondary data, sourced from the annual reports of eleven DMBs from 2010 to 2021. The gender diversity composite score was generated using a Principal Component Analysis of the proxies for gender diversity using a Varimax Rotation. While the model was estimated using the panel GLS model which is robust to the residual misnomer. The findings revealed that Female CEOs, Female Executives, Female Non-Executives, and Firm Size had a positive and significant relationship with financial performance while Female employees, Female Audit Committees, Board meetings, leverage and Inflation revealed a negative and significant relationship with financial performance. Specifically, the study concluded that gender diversity maintained a positive and significant relationship with Return on Assets. Our findings imply that board gender diversity may promote the strength of corporate governance and reduce the likelihood of agency conflicts, enhancing performance.