Board Diversity and Corporate Outcomes: Evidence from Gender and Ethnic Heterogeneity in Pakistan’s Non-Financial Firms

Abstract

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The essay relates to the influence that gender and ethnic heterogeneity have on the company boards regarding the elements of innovation, economic prosperity, and sound decision-making within the new markets.  To address endogeneity and dynamic relationships balanced on a panel of non-financial listed firms in Pakistan Stock Exchange (PSX) over a period of four years (2015-23), we use the Generalized Method of Moments (GMM).  Board Gender diversity increases financial performance, innovation, and decision-making.  Ethnic heterogeneity improves creativity and diminished impact on financial performance, indicating that there is a slight coordination and communication issue within the diverse boards.  These findings highlight the element of inclusive governance in Pakistan. The institutional and cultural context has a significant influence on the effectiveness of boards in Pakistan.  This study adds to the literature about the diversity of the board, helping policymakers, regulators, and corporations to improve corporate governance and their competitiveness in the emerging markets in the long term by offering concrete evidence of the same.