How does profitability impact the relationship between gender diversity on boards of directors and social performance?

B. Elango; B. Elango

doi:10.3934/GF.2025018

Green Finance

2025, Volume 7, Issue 3: 481-494. doi: 10.3934/GF.2025018

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Research article

How does profitability impact the relationship between gender diversity on boards of directors and social performance?

B. Elango ^,

Management Department, College of Business, Illinois State University, Illinois, USA

Received: 25 March 2025 Revised: 17 July 2025 Accepted: 18 July 2025 Published: 01 August 2025
JEL Codes: D71, D91, G34, G39, M14

Using upper-echelon theory and the notion of managerial slack as a conceptual base, this study examines the moderating effect of profitability on the relationship of board of directors (BOD) gender diversity with social performance. This study's sample is based on a matched dataset of insurance firms using two reliable sources, namely S & P Global IQ and Refinitiv (now known as LSEG Data & Analytics). We focus on a single industry from a single country as it will allow for a reasonable performance comparison across firms. We use step-wise multiple regression models to test the hypotheses. Our findings indicate that gender-diverse boards are positively related to the social performance of firms. We find the strength of this relationship to vary according to the profitability of the firm. Study findings advance our knowledge of the corporate governance literature on this topic by bringing the notion of managerial discretion into the relationship between BOD diversity and social performance.
- board of directors,
- gender diversity,
- social performance,
- ESG ratings,
- firm size,
- profitability
Citation: B. Elango. How does profitability impact the relationship between gender diversity on boards of directors and social performance?[J]. Green Finance, 2025, 7(3): 481-494. doi: 10.3934/GF.2025018

Related Papers:

Abstract

Using upper-echelon theory and the notion of managerial slack as a conceptual base, this study examines the moderating effect of profitability on the relationship of board of directors (BOD) gender diversity with social performance. This study's sample is based on a matched dataset of insurance firms using two reliable sources, namely S & P Global IQ and Refinitiv (now known as LSEG Data & Analytics). We focus on a single industry from a single country as it will allow for a reasonable performance comparison across firms. We use step-wise multiple regression models to test the hypotheses. Our findings indicate that gender-diverse boards are positively related to the social performance of firms. We find the strength of this relationship to vary according to the profitability of the firm. Study findings advance our knowledge of the corporate governance literature on this topic by bringing the notion of managerial discretion into the relationship between BOD diversity and social performance.

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