Authors: Ailyn A. Shi, Michelle Kris A. Ong Yiu, Louie Angelo S. Ricafrente, Angelo A. Unite, and Michael J. Sullivan

Research Article

Year: 2021, Volume 21 Number 2

Pages: 11 – 30


The notion that corporate boards should be more gender-diverse is attracting greater attention around the world. Some scholars argue that gender diversity on boards improves firm performance and induces more prudent corporate decision- making. This rationale is based on the hypothesis that women are less overconfident and are innately more risk-averse than men. Other researchers argue that firms having more female directors are associated with greater corporate risk-taking, as past studies show that risk-seeking women tend to be appointed to the board. Still, another strand of literature argues that risk- aversion does not vary between homogeneously male boards and more gender-diverse boards. In this paper, we investigate the relationship between board diversity for Philippine firms and corporate risk-taking over the period 2003 to 2015. We use four alternative measures of corporate risk-taking and employ the two-step system generalized method of moments estimation technique to account for endogeneity issues that may influence this relationship. Overall, we find some evidence that greater female participation in the boardroom increases financial risk-taking, proxied by the leverage and current ratio, but decreases riskiness of firm outcomes, proxied by the volatility of return on assets. This suggests that greater gender diversity in Philippine corporate boards, while addressing the usual equality, social, and fairness considerations, also has economic consequences that may or may not be desirable with respect to firm risk. 

Keywords: Board diversity, Corporate risk-taking, Philippine corporations, System Generalized Method of Moments