The Asymmetric Effect of Board Diversity on Firm Risk and Working Capital Policies: Evidence from Panel Quantile Regression

The present study aimed to investigate the asymmetric effects of board gender diversity (BGD) and board financial expertise (BFE) on firm performance, riskiness, and working capital management (WCM). Using panel quantile regression and unbalanced panel data of energy firms in Pakistan over the period 2010 to 2020, the findings suggest that female directors on boards are weak monitors and their presence is merely symbolic. There is no significant effect of BGD on firm performance or WCM. Their incapability to restrict managerial opportunism promotes excessive risk-taking in the firm. On the other hand, financial experts on board uplift low- and moderate-performing firms and restrict the risk-taking behavior when the riskiness of the firm reaches a certain level. Furthermore, they improve the working capital of the firms when aggressive WCM policies are pursued by firms’ managers.