Gender diversity in the board of directors and agency costs: empirical evidence from Vietnamese listed firms

Abstract

According to the Vietnam Chamber of Commerce and Industry’s report (2014), one out of four businesses is owned by women. Along with the increasing recognition of society nowadays towards the role of women, the study of the impacts of gender diversity and the impact of women's presence in the Board of Directors on financial performance of enterprises, in specific the agency cost indicator, is needed. The research team conducted this study on 164 non-financial enterprises listed on Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) from 2012 to 2021. The research model is based on foundation theories (agency theory, human resource dependence theory, critical mass theory...). The research result shows that there is a negative impact between gender diversity in the Board of Directors and agency costs of enterprises, just as the initial analysis and projections of the research team beforehand. This means the presence of women in the BOD structure will create positive changes in the financial performance of the business through decreasing in agency cost. From the conducted results, policy makers will have motives and experimental evidence to nominate women for important positions in the BOD structure, encourage gender equality in business in particular and society in general.