Nexus between Board Gender Diversity and Firm Risk: Evidence from Listed Private Commercial Banks in Bangladesh

Abstract

This study acknowledges the correlation between risk-taking behavior and the gender composition of the board members. To arrive at this epilogue, a selection of 21 private commercial banks in Bangladesh has been chosen as a representative sample for the period spanning from 2013 to 2022. The firm risk is evaluated from the standard deviation or volatility of daily stock returns, which is the dependent variable of the article. The gender diversity in the board has been incorporated as the independent variable. The study has also controlled for the size of the board, the level of leverage, the age of the bank, the capital intensity of the bank, the financial performance, the tangibility of the bank, and the GDP growth rate as well. Employing the fixed effect panel regression analysis, this study demonstrates a unique and notable positive association between the degree of gender diversity on the directors’ board and the inclination to engage in behavior involving risk in the banking industry of Bangladesh. The age of the firm, the financial performance, and the tangibility of the firm are also found to positively influence the firm risk. The firm risk is found to be negatively correlated with board size and the intensity of capital. This study provides evidence that the presence of gender diversity on corporate directors’ boards has a considerable consequence on business risk within the private banking industry in Bangladesh.