Corporate Governance
Corporate Governance
Corporate Governance
Group-10
ID Name
Evidence :this research study uses 150 firm years along with 13 independent
variables during the period of 2015 to 2019 of 30 listed insurance companies of
Bangladesh.
Result : exists a positive association of female directors with the firm financial
performance although others female directors’ characteristics affect the
performance differently.
Recommends: country, culture and business sector should be taken into account on the
eve of taking any decision regarding female directors.
Introduction
Board diversity interest emphasizing more particularly on the gender & involvement of
female directors on the board is a most studied topic. Gender inequality and ensuring equal
opportunity for women have become a subject of interest and concern .The combination of
men and women in their work environment is gender diversity and it is being treated by
way of a corporate governance mechanism variable observing how much the gender
diversity affects the firm performance ultimately. India, Japan and China represent 2.4%,
9.5% and 7% female directors ,Bangladesh is not so far diverse. In Consequences there still
lack a transparent understanding, this empirical study scrutinizes the presence and
proportion of female directors and its impact on firm performance.
This study adds to the literature of gender diversity in the following two ways:
Firstly, this study will provide a clear understanding regarding the impact on
performance in insurance sector due to presence of female directors on the board
secondly, it will enhance value to the literature of gender diversity in insurance sector of
Bangladesh.
Research Objective
To determine the presence and proportion of female directors in the board and its effects on firm
financial performance in insurance sector of Bangladesh is the prime goal of this empirical research
study.
Literature Review
Insurance industry in Bangladesh is struggling for many reasons. In spite of having a large number
of insurance companies in our country, their growth as per the population coverage is not at
satisfactory level & firm performance is less examined so far. (Nurul, 2008).
Argued by studies shows that there exists a positive relationship between the gender diversity on the
board and firm performance and has a strong effect while others studies fade away this conclusion.
Howlader et al. (2020) showed that there is no relation, also recommend to
ensure a healthier environment and opportunities to accomplish a role as a
director.
In the contrary, Sheikh et al. (2018) notified a noteworthy relationship with the
return on equity (ROE) but not the return on asset (ROA).
More interestingly, Adams and Ferreira (2008) showed a complete negative
relationship. Analyses S&P 1500 companies reveals that-
a) Too tough to reach a conclusion,
b) The turnover of CEO of diverse board are very sensitive
c) Equity-based compensation for directors is comparatively higher. Dutta and Bose
(2006) revealed that is, the reflection of the work of Adams and Ferreira (2008), a
negative relationship between gender diversity and firm performance.
Background of the Study & Hypothesis
Development
Results
-Positive relation
Traditionally maleGender
-NegativeIncreasing
directors Diversity
participation
association in thedirectors
of female Board
-No strong evidence
Holding more ownership by executive directors than the other directors has positive
impact.
The insurance sector in Bangladesh, more percentage of ownership are on the hand of
family members which does not mean the actual responsibility and accountability.
Result
Board independence
Family Ownership increased financial
Attendance -No obligation result
-Affect performance -Show off
-No effect
<H3> Positive relationship between the board meeting attendance of female directors and
firm performance.
Audit committee
<H6> Positive relationship between the female directors’ academic qualification and
firm performance in insurance sector of Bangladesh.
<H7> Positive association of the female directors’ years of experience and firm
performance in insurance sector of Bangladesh.
Family & Political Relationship
Female directors are either the chairman or the other directors of board are
appointed solely on the source of family relationship.
<H8> There exists a negative relationship between the female directors’ family
relationship & political relationship in appointment and firm performance.
Control Variables
Firm size: The larger firms get several advantages than the smaller firms
(Increase profitability, diversified board etc.)
Firm leverage: It indicates how much assets of a firm has to pay the
liabilities. Capital structure of a firm is influenced by firm leverage which
finally affects the firm performance.
Methodology
Methodology
FDNRC+ β8 FDAQ + β9 FDYE + β10 LN FDFR + β11 FDPR + β12 LN FS + β13 LN LEV
+ εi …………(1)
FDNRC+ β8 FDAQ + β9 FDYE + β10 LN FDFR + β11 FDPR + β12 LN FS + β13 LN LEV
Research Model (Continued)
Variables used in research model –
Dependent variables-
ROA
ROE
Independent variables are-
FD
FDOWN
FDATT
FDID
FDAC
FDRMC
FDNRC
Independent Director (Continued)
FDAQ
FDYE
FDFR
FDPR
LNFS
LEV
Findings & Interpretation
Descriptive Analysis
Variable Obs. Mean Min Median Max SD
Among 150 0bs. The FD (%) 150 21% 0% 20% 50% 13%
insignificant as it is between
FDAT (%) 150 74% 0% 86% 100% 35%
8%-9%, However, FDAT is FDID (%) 150 4% 0% 0% 67% 14%
among 150 obs. FS(million) 150 5920.03 619.56 1647.91 45367.11 12136.26
FD in audit committee is
LEV (%) 150 41% -6% 38% 98% 22%
7%, while in RMC and ROA (%) 150 13% 1% 7% 158% 26%
NRC, the percentage is 1%, ROE (%) 150 26% 4% 11% 243% 50%
MEGHNALIFE 6
Janata Insurance company is KARNAPHULI
JANATAINS
6
9
7
pioneer in case of recruiting
ISLAMIINS
GREENDELT 4
GLOBALINS 3
female directors, while FEDERALINS
FAREASTLIF
4
5
4
Phoenix Insurance Company EIL
EASTLAND
4
5
EASTERNINS
has the second highest FD. DHAKAINS
DELTALIFE
2
3
CRYSTALINS 6
However, United Insurance CITYGENINS
CENTRALINS
4
6
BNICL 4
and Padma Insurance BGIC 0
UNITEDINS 1
FD. 0 1 2 3 4 5 6 7 8 9
Female Directors’ Academic Qualification
HSC.
Findings & Interpretation (Continue..)
Female Directors’ Years of Experience
Female Directors’ Family Relationship & Political
Relationship
Regression Analysis
Hypothesis Testing
Female Directors’ Years of Experience
ROA ROE
financial performance. The presence 1. Female Directors ROA & ROE P < 0.05 Accepted
& proportion of female directors’ in 2. FD Ownership ROA & ROE P < 0.05 Rejected
core board committee are less in 3. FD Attendance ROA & ROE P < 0.05 Accepted
number and their performance are not
4. FD as Independent Director ROA & ROE P < 0.05 Accepted
positively related.
5. Female Directors in
• Family and political relationship and Audit Committee ROA & ROE P > 0.05 Accepted
Risk Mgt. Committee ROA & ROE P > 0.05 Accepted
ownership also affect the performance Nomi. & Remu. Committtee ROA & ROE P > 0.05 Accepted
negatively.
6. FD Academic Qualification ROA & ROE P > 0.05 Accepted
• Oppositely, female directors’
7. FD Years of Experience ROA & ROE P < 0.05 Accepted
attendance, female independent
directors and years of experience 8. FD Family Relationship ROA & ROE P < 0.05 Accepted
Political Relationship ROA & ROE P < 0.05 Accepted
positively influence the firm
performance.
Conclusion
The equal opportunity for the women is a subject of frequently discussion.
This study recommends that some factors should be taken into account on
The constraints of this empirical research study must be considered on the eve
of reaching any conclusion on the basis of this research.
The major limitation is that the result varies in terms of country, culture and
sectors.
So, these three things along with other factors should be taken into account.
This research uses 150 firm years during the period of 2015 to 2019.