Seats of Change? Female Board Directors and Firm Performance in Pakistan- An Event Study Approach

This paper explores the impact of female corporate board directors on firm performance and culture in Pakistan. Using data from 2012-23 on listed and unlisted firms in the country, we use an event study approach to assess the causal impact of the first entry of a female director on firm performance, exploring heterogenous effects on family and non-family firms. We extend this firm-level analysis using a director-level dataset that allows us to chart the specific characteristics and contributions of directors on different types of boards. We supplement this quantitative evidence with detailed interviews of 20 board directors as well as a larger survey of board directors. Our results show that the first introduction of a female director on a board has a positive and significant effect on firm assets, particularly in the case of family firms. Meanwhile non-family firms experience significant, positive effects on firm profitability, as well as on returns on assets and equity, effects that persist and accentuate in the years following the inclusion of a female director. Family firms, however, do not experience any significant effect on profitability. We argue that the inclusion of female board members in family firms often entails the appointment of 'token' directors that help consolidate firm ownership and control, manifested in growth in assets, but do not otherwise improve firm governance. In non-family firms, female directors are usually appointed based on their competence and expertise, leading to improvements in firm-level decision-making, leading to better performance outcomes across a range of measures.