Determinants of Iberian Companies’ Performance: Corporate boards and the non-linearity of gender diversity

Abstract

This paper aims to analyze the performance determinants of listed companies in the Iberian Peninsula, focusing on the analysis of the effect of gender diversity and the structure of the board of directors. To achieve this aim, we analyzed 97 listed companies, of which 23 are Portuguese and 74 are Spanish, between 2015 to 2019. We employ Arellano and Bond’s (1991) Generalized Method of Moments (GMM) system model to test the hypotheses. The results show an important impact of corporate governance variables on corporate performance. Specifically, board size, average director age, and board academic qualifications are crucial to explaining profitability and market value. Moreover, we identified a non-linear relationship between gender diversity and profitability and market value levels due to critical mass theory and quotas that enhance more social justice. We concluded that the corporate performance determinants differ depending on the performance measures. As far as the authors are aware, this study is the first to analyze the non-linear effect of gender diversity and board structure (size, educational qualifications and average director age) on the performance of Iberian listed companies as a single market.