Impact of Board Gender Diversity on Profitability of Agricultural Listed Companies in Kenya: 2008-2015

Abstract

The paper examines the impact of board gender diversity on profitability of the agricultural listed companies in the Nairobi Securities Exchange over the period 2008 to 2015. Profitability is measured using Tobin’s Q as a market-based measure, and Return on assets (ROA) as an accounting-based measure. Panel data is analysed using Fixed Effect model and Random Effect model. The results for FEMDIR are mixed and different depending on the measure of profitability. They are negative and significant when using Tobin’s Q and positive and statistically insignificant when ROA is used as the measure of profitability. The moderating variables also give different results depending on the profitability measure. BRDSIZE is negative and statistically significant when using Tobin’s Q and is positive and insignificant when using ROA as the profitability measure. FIRMSIZE is negative and statistically significant when using Tobin’s Q and positive and insignificant when using ROA. Irrespective of the profitability measure used, PWDIR was found to be positive and statistically significant. This means that presence of women on boards of agricultural listed firms will lead to increased profitability. The study recommends that agricultural firms listed at the NSE should ensure that they include women on their boards since the presence of women on boards is found to impact profitability positively.

Keywords: Gender Diversity, ROA, Tobin’s Q, Profitability, Board