Title: Guardians of resilience: unveiling the power of board diversity in mitigating financial distress

Authors: Shital Jhunjhunwala; Nitya Garg; Sonia Mudel

Addresses: Faculty of Commerce and Business Studies, Delhi School of Economics, University of Delhi, New Delhi, India ' Department of Commerce, Delhi School of Economics, University of Delhi, Delhi, India ' Department of Commerce, Shyam Lal College(M), University of Delhi, Delhi, India; Department of Commerce, Delhi School of Economics, University of Delhi, Delhi, India

Abstract: Board diversity is a strategic asset for enhancing a firm's resilience in crisis. This study investigates the impact of board diversity in mitigating the probability of financial distress. The study focuses on a sample of 401 non-financial companies listed on NSE from 2018 to 2022. Dynamic panel models with a generalised method of moments were employed to explore the relationship between board diversity and financial distress. This study has focused on observed diversity (gender and age) and cognitive diversity (tenure and education) variables for a more comprehensive investigation. By considering factors such as directors' age, professional experience, and tenure during nominations, companies can build a board capable of steering it through financial challenges more adeptly.

Keywords: financial distress; board diversity; generalised method of moments; GMM; dynamic panel; Altman Z score; bankruptcy.

DOI: 10.1504/AAJFA.2026.154704

Afro-Asian Journal of Finance and Accounting, 2026 Vol.16 No.4, pp.413 - 434

Received: 27 Jun 2024
Accepted: 16 Jan 2025
Published online: 10 Jul 2026 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article