Can board gender diversity prevent corporate failure? Evidence from state‑owned enterprises in an emerging economy

Abstract

This study aims to explore the economic importance of board gender diversity for the likelihood of firm failure among state-owned enterprises (SOEs) in South Africa between 2011 and 2022. This study employs a binary logistic regression technique as the primary estimation technique. To corroborate the outcomes from the logistic model, the study also utilises panel regression approaches such as probit and feasible generalised least squares to control for nonlinearity, heteroscedasticity, autocorrelation and heterogeneity. The key finding from the study reveals that female board representation significantly reduces the odds of corporate failure. A further outcome from the study reveals that women directors must constitute a critical mass of at least 50% of the boardroom to significantly mitigate business failure among the selected SOEs. The outcome provides solid support for board gender diversity, inclusivity and equity as effective governance mechanisms to promote the financial health of SOEs. The study thus offers proof in favour of achieving Sustainable Development Goal 5, which aims to attain gender equality, particularly in positions of leadership and decision-making in the public and private sectors, and the King IV Code of corporate governance for firms in South Africa on board gender diversity.