Published Online:January 2025
Product Name:The IUP Journal of Corporate Governance
Product Type:Article
Product Code:IJCG060125
DOI:10.71329/IUPJCG/2025.24.1.107-117
Author Name:Chetna Priyadarshini and Rajneesh Ranjan Jha
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:107-117
The role of female directors, or gender diversity in top positions of management is effective in case of advanced nations but may not necessarily hold true with respect to emerging nations like India. This paper seeks to analyze if introduction of clause 49 of the Securities and Exchange Board of India (SEBI) Listing Agreement has brought any significant change in the number of female directors on the board. Clause 49, which came into effect on December 31, 2005, can be directly comparable to US Sarbanes-Oxley Act of 2002. Although there are some important variations between the two, it also mandates one female director on the corporate boards. We use descriptive statistics and regression analysis using 7078 Indian listed firms to examine women directors’ representation with time. The dependent variable was regressed on time to find the time trend of female directors. We find that there is a positive and significant impact of clause 49 on the average number of female directors in Indian companies. However, firms only fulfilled the mandatory appointment of female directors by appointing only one director which shows the lack of active role played by female directors in firms’ decision-making process. Policymakers should reexamine this policy to improve the female directors’ active participation and mandating independent female directors for better corporate governance.
In recent years, there has been a growing interest in the role of female board directors in influencing firm performance (Erkut et al., 2008; Barua et al., 2010; and Faccio et al., 2016). With an increasing number of women joining corporate boards, researchers and practitioners alike have sought to understand the impact of gender diversity on decision-making processes and overall company success.