Title: Board gender diversity and firm risk-taking: the moderating role of board size

Authors: Hussain Muhammad; Stefania Migliori

Addresses: Department of Management and Business Administration, 'G. D'Annunzio' University of Chieti – Pescara, Viale Pindaro, N. 42, 65127, Pescara, Italy ' Department of Management and Business Administration, 'G. D'Annunzio' University of Chieti – Pescara, Viale Pindaro, N. 42, 65127, Pescara, Italy

Abstract: This paper provides new insights into the relationship between board gender diversity and firm risk-taking by examining whether board size (BS) alters the influence of gender diversity on firm risk-taking. This study employs a quantitative method with a sample of 192 non-financial listed firms in Italy from 2016 to 2020. Based on our results, board gender diversity does not exert a consistent influence on firm risk-taking. Instead, its effect is contingent upon BS. Given that larger and smaller boards differ in building and employing their strategic decisions, we find that smaller boards are willing to ratify risky policy choices aligned with the shareholder's interest. Notwithstanding, we failed to find any significant gender diversity's effect on risk-taking in firms with smaller boards. On the other hand, larger boards are found to be less discrete and more inclined to form middle-ground, moderate, and safe decisions to reduce firm risk-taking. Our results reveal that larger boards accentuate the risk reduction effect of gender diversity, showing that Italian non-financial firms are better off with larger and gender-diverse boards. Larger boards with more female members enhance problem-solving and market insights, facilitate adherence to the government or regulatory policies and help reduce the firm's risk.

Keywords: board gender diversity; board size; BS; firm risk-taking; agency theory; resource dependency theory; non-financial firms; Italy.

DOI: 10.1504/IJMFA.2023.131738

International Journal of Managerial and Financial Accounting, 2023 Vol.15 No.3, pp.346 - 371

Received: 26 Oct 2021
Accepted: 16 Jun 2022
Published online: 30 Jun 2023 *

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