Does board gender enhance Palestinian firm performance? The moderating role of corporate social responsibility

• DOI: https://doi.org/10.1108/CG-08-2020-0325
• Published date: 18 January 2021
• Date: 18 January 2021
• Pages: 685-701
• Subject Matter: Strategy,Corporate governance
• Author: Mohammed W.A. Saleh,Mohammad A.A. Zaid,Rabee Shurafa,Zaharaddeen Salisu Maigoshi,Marwan Mansour,Ahmed Zaid

Does board gender enhance Palestinian

f‌irm performance? The moderating role

of corporate social responsibility

Mohammed W.A. Saleh, Mohammad A.A. Zaid, Rabee Shurafa,

Zaharaddeen Salisu Maigoshi, Marwan Mansour and Ahmed Zaid

Abstract

Purpose –This study aims to examine how the salient board gender diversity among board directors

affects firm performance both directly and indirectly, throughthe role of corporate social responsibility

(CSR) in listedfirms on the Palestine Stock Exchange overthe period 2010–2017.

Design/methodology/approach –Based on panel data of 384 observations fromall firms listed on the

Palestine SecurityExchange during the period from 2010 to 2017, thisstudy uses panel data regression

to examinethe effect of the predictors on firm performance.In addition, to mitigate the endogeneityissue,

the analysiswas repeated by using one-stepgeneralized method of moments.

Findings –The resultsshow that board gender diversity hasa positive and insignificant influenceon firm

performance.However, under the moderating effectof CSR, the finding turns from positive insignificantto

positivesignificant.

Originality/value –The study is timely given thatgender diversity plays pivotal roles in determining the

performance in terms of monitoringand controlling and further willing to engage in social responsibility.

The prior research in Palestine has never investigated the effect of board gender diversity. As such,

Palestinehas not established a legal quota of minimumfemale representation on boards,and because of

it, the country has weak women’s representation among firms. It, therefore, becomes a necessity to

examine the influenceof board gender diversity on the financial performance of listed firms in Palestine.

Besides, the mixed result in previous literature on the board gender diversity and firm performance

indicatesthat there is an indirect effect that needsalternative explanations.

Keywords Palestine, Corporate social responsibility, Firm performance, Board gender diversity

Paper type Research paper

1. Introduction

One of the top crucial internal governance mechanisms used for monitoring and controlling

organizational management among managers and to safeguard the interests of

stakeholders is the board of directors (BOD). It is used for monitoring the firm’s strategic

plans and ensuring that management is working toward achieving the aims of the

organization. There are several corporate governance (CG) codes that have been

established all over the world that advocatesthe BOD’s service as an active and committed

entity that is responsible to ensure that firms have good CG. In relation to this, the

Palestinian Corporate Governance Code (2009) empowered the BOD to function as

establishers of good governance and required its members to serve in achieving the firm’s

aims and objectives, which will in turn, improve firm performance. As such, understanding

the BOD characteristics becomes a necessity in determining how they can influence the

performance of firms. Therefore, this study fills the literature gaps by focusing on the board

gender diversity, more specifically in Palestine where literature of the kind is near absence

(Informationabout the

authorscan be found at the

end of this article.)

Received 15 January 2020

Revised 28 October 2020

27 November 2020

Accepted 10 December 2020

Declaration of competing

interest: The authors declare

that they have no conflict

of interest.

The authors would like to thank

Palestine Technical University,

Khadoori for its supports.

DOI 10.1108/CG-08-2020-0325 VOL. 21 NO. 4 2021, pp. 685-701, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 685

(Saleh et al., 2018a). It should consider that the political and economic issues that facing

countries like Palestine may have a tremendous impact on the application of CG, which

could provide different results(Ararat et al.,2017).

Norway is considered as the pioneering country to require the minimum female

representation level in the public firms’ corporate boards, with a quota of 40% (Hoel, 2008),

following which other countriesset up their own quota in different levels. For instance, Spain

and France require a minimum level of 40% female representation in board of large listed

firms, whereas Italy and The Netherlands require a minimum of 30% (De Cabo et al.,2012).

Notably, such quotas and average representations are increasing in Europe and the whole

world. In the Malaysian context, the women’s role in the country’s development has been

acknowledged by the government by issuing a ruling in June 2011, establishing a 30%

minimum level of decision-making positions in the corporations to women in the hopes of

achieving diversity of genderin CG structures (The Star Online, 2016).

Most of the studies on board gender diversity and firm performance have been carried out

mostly in developed nations, with just a few focusing in developing ones. In the Palestinian

context, the relationship between presence of women on corporate boards and firm

performance has been generally ignored. As such, regulators in Palestine have not

established a legal quota of minimum female representation on boards. Hence, may be

among the reasons why the country has weak women’s representation among firms. In

addition, the findings of the studies conducted in other countries may not be applicable to

Palestinian context. This is because of the peculiarity of Palestine in terms of cultural and

economic settings. The excessive, disproportionate and indiscriminate use of force by

Israeli forces which led to a high number of causalities, fatalities or death of men may

impact gender dynamics at the household level (Saleh et al., 2020). This could manifest in

increased burden on Palestinian women to assume greater responsibility within the

household, particularly if the male that was killed or disabled was the family breadwinner

(Economic and Social Commission for Western Asia, 2018). This portrays that the

participation of women on corporate boards is more of necessity, which differs from the

voluntary participation obtainable in other parts of the world. Hence, the findings of

the studies conducted in other countries may not be applicable to Palestinian context.

Therefore, there is need to conduct a study taking into considerations the unique

characteristics of the countryin policy design. Therefore, it becomes a necessity to examine

the influence of board gender diversity on the financial performance of listed firms in

Palestine. The findings of such examination can assist policymakers to set up suitable

policies on the representativesof females on corporate boards.

There are no clear consensus results on the relationship between board gender diversity

and firm performance. Some studiesestablished that higher female representation on BOD

improves the firm’s performance. These studies include Adams (2016) and Saleh et al.

(2018a), whereas others arrive at contrary view (Christiansen et al., 2016;Zhong et al.,

2014), and some studies failed to establish any significant relationship (Carter et al.,2010;

Rose, 2007). Because of the mixed findings in literature, there is a need to examine the

relationship between board gender diversity and firm performance. This was brought to

light by some studies such as Galbreath (2018), who stated that the inconsistent findings

may be attributed to the differences in the adoptedmethodologies and contexts (countries).

Such mixed findings have led to the argument that the direct link may be considerably

simple, but despite this argument,research on the validity of alternative possibilities, like the

possibility of a moderating variable, is still lacking. To mitigate the literature gap, Galbreath

(2018) indicated that the relationshipbetween women on boards and financial performance

may be indirect. Hence, the need to introduce a moderating variable to strengthen

relationship between the variables. Baron and Kenny (1986) suggest that a suitable

moderating variable could be introduced to strengthen the relationship between

independent and dependent variables.

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