An Empirical Study On The Correlation Between Gender Diversity Of Board And Financial Risk

The board of directors has always been the core institution of corporate governance,which always plays an important role in the company.On one hand,the board should be responsible for the majority of shareholders and maintain the shareholders' equity.On the other hand,the board should also supervise the operators' management activities and decisions.The role of the board of directors has a close connection with its composition.In recent years,scholars at home and abroad have begun to study the influence of the internal composition of the board on the enterprise from the perspective of gender diversification.The existing literature focuses on the correlation relationship between the gender diversity of the board and the performance or value of the corporate,while literature about the correlation relationship between the gender diversity and the financial risk is relatively rare.Performance and value is the ultimate embodiment of the company's operating arrangements,but high performance and high value don't represent strong ability to prevent and control risks.Besides,financial risk is the most essential risk of all.All business activities will be reflected in the financial arrangements.Companies with high performance and high value are more trustworthy only if they could control their financial risk very well.Therefore,it is worthwhile to explore whether there is some correlation between the financial risk and the gender diversity of the board of directors.From the perspective of subjective factors,no matter potential risks or financial results obtained by the company,are the consequences of a series of decisions made by men.Decision-making system has close connection with men's subjective purposes,and different people will make more comprehensive decisions,which will place high demands on individual qualifications of members involved in decision-making.Thus the construction of the board members is particularly important.Diversified directors can make a more comprehensive judgment on the environment and take rapid steps to react and change.Due to physiological characteristics of the congenital differences in personality,female directors and male directors will have different interpretations of the same environment and then make different decisions,and ultimately reach different results.While whether there is a correlation between gender diversification and financial risk remains to be confirmed.Gender diversity refers to the balance between the number of male directors and female directors,which is manifested in the proportion of male and female directors in the total number of directors.Gender differences are first reflected in the inherent differences in personality,and then affect the decision-making system,and ultimately reflected in the operation,performances,risk and other aspects in a company.Given the current situation that in most listed companies male directors account for the vast majority,the gender diversity of the board in this paper focuses primarily on the proportion of female directors in the total number of directors.This paper examines the gender diversity status and financial risk of 845 listed companies in Chinese A stock market,and builds the multiple linear regression model on the basis of the relevant theories to study the correlation between gender diversity of the board and financial risk.The empirical results show that the existence of female directors in the board has a negative correlation with financial risk,and the higher the proportion of female directors,the more negative the role plays.Finally,based on the results of empirical research,this paper provides suggestions from the macro and micro perspective in order to improve the corporate governance theory and provide favorable suggestions for improving companies' selection system and talent selection system.