**4. Board gender diversity and firm outcome**

Although there is social pressure for gender equality and promotion for a diverse gender board, the empirical evidence on the relationship between board gender diversity and firm performance is inconsistent and the results ambiguous (for a meta-analysis, see [5, 30, 31, 63]). This section discusses various potential causes of these mixed results.

From the theoretical perspective above, one may suppose those female directors appear to reduce agency costs, facilitate access to untapped resources, and improve performance. Consistent with this viewpoint, Carter et al. [64] investigate the relationship between the percentage of female directors on boards and Tobin's q for a sample of 638 U.S. Fortune 1000 firms. They conclude that there is a positive relationship between the percentage of female directors on the board and firm value. Bennouri et al. [65] use multivariate analysis to test the relationship between the percentage of female directors and several measures of financial value (e.g., return on assets (ROA) and Tobin's q). They find gender diversity is positively associated with accounting-based performance measures, but not statistically significant related to Tobin's q. These findings suggest that the interactions between gender diversity and firm performance are not uniform across various measures of performance.

Another explanation for these inconsistent findings is related to methodology [66]. For instance, some researchers, such as Ahern and Dittmar [67] and Matsa and Miller [68], use quota for female directors as a natural experiment. They treat an increase in board gender diversity as an exogenous event. Nevertheless, the gender quota was first discussed in 1999 and firms were given two years to adjust; thus, this law gives too much freedom to define it as the shock [66].

The literature shows that the effects of board composition on firm performance vary among different environmental conditions [30]. In the context of weaker investor protection, board diversity has higher influence on firm performance. Each governance mechanism has its costs and benefits, resulting in the interrelation between governance mechanisms [69]. Firms with weaker investor protection require a tougher monitoring to protect the shareholders' rights. The finding of Bennouri et al. [65] supports this notion. They show a positive association between accounting performance and female directorship in a low investor protection environment. Similarly, the economic condition could be another explanation for these inconsistent findings. In periods of economic adversity, firms needed tougher monitoring and more diverse advice than they would normally need, thereby emphasizing the importance of board gender diversity [6, 29].

Another reason for the conflicting evidence on board diversity may be the ownership structure. Prior studies indicate that the concentrated owners have the means and incentive to monitor the top management effectively [70]. Likewise, Vieira [71] shows the relationship between gender diversity and firm performance differs between family owned and non-family owned firms. Specifically, she finds that female directors have a more positive impact on the performance of family firms relative to non-family firms.

In short, although, the benefit of board gender diversity is ambiguous and unclear, it is better to focus on potential benefits to society that go beyond a narrow indication of firm profitability. Further research on the impact of board gender diversity on firm performance is likely to generate new insights about the potential costs and benefits associated with having a gender equality board.

#### **5. LGBT+ and firm**

In 2007, the former CEO of British Petroleum (BP), Lord John Browne resigned from the company where he had worked for four decades after being outed as gay by the tabloid reports of a former lover. He said he had decided to leave now to "avoid unnecessary embarrassment and distraction to the company". As soon as Browne handed his resignation letter, BP shares edged upward from \$67 to just under \$69 [72].

In the nine years since then, things have changed at a dizzying pace. Society has changed its perception about the LGBTQ+ people. There is a much greater acceptance of LGBTQ+ people and their rights; marriage equality has been achieved nearly all around the world. In 2014, Apple CEO, Tom Cook publicly acknowledged his sexuality, saying that he is "proud to be gay". But Cook's decision to announce did not have much impact on Apple stock. The stock price was virtually unaffected [73].

Not surprisingly, a large number of corporations have considered creating a positive working environment for LGBTQ+ people by introducing LGBT-supportive corporate policies. For instance, Accenture partners with the UN to help operationalize the UN's LGBTI standards of workplace equality. In addition, they also research the advantages of an LGBTQ-inclusive workplace. Researchers also have become increasingly interested in LGBT-related issues. Recent research has focused on potential financial benefits to corporations for implementing LGBT-supportive corporate policies. LGBT customers often have a higher disposable income [13]. They are more likely to buy products from a LGBT-supportive company [74]. It has also been documented that firms with an LGBT equality policy give a positive signal to customers, resulting in higher customer satisfaction both directly and through enhanced marketing capability [14]. LGBT-supportive firms enjoy better credit rating than do non-LGBT supportive firms [15]. Also, a few studies have support for the hypothesized positive association between these policies and financial outcome [13, 16, 17]. At the same time, in terms of human-resources-related benefits, firms with LGBT-supportive policies have a less stressful work environment [18]. Consequently, LGBT-friendly firms tend to have lower employee turnover [19].

#### *Gender Diversity and Corporate Governance DOI: http://dx.doi.org/10.5772/intechopen.101189*

Other studies have highlighted the linkage between board structure and LGBTfriendly policies. The opportunity-seeking managers may adopt a favorable working environment policy to enjoy higher compensation through pay-for-performance measures such as bonus or through stock option exercise. Kyaw et al. [20] documents firms with high CEO influence over the board, measured by co-opted board, tend to impose LGBT-supportive policy. Additionally, their finding suggests CEOs use LGBT-supportive policies for self-benefit, in particular, higher compensation.

To summarize, the above findings on LGBT-supportive policies indicate that such policy enables a friendly working environment, which in turn motivates and improves firms' human capital. At the same time, LGBT-supportive policies can be bad for the firm if they are used as a mechanism by managers who want to appear open minded and ethically correct.

### **6. Future research**

To further develop our understanding of the field, there is still clearly a pressing need for research that could help to explain the inconsistent findings observed across previous studies of the relationship between female directors and firm performance, especially under various economic conditions and multi-country studies to supplement the mainly single economic environment condition. This work can enrich our understanding of the impact of board composition on different scenarios.

The COVID pandemic exposed fault lines of gender equality, leaving women to bear the burden of unpaid work as well as being more likely to be laid off or furloughed. This could be a good opportunity for researchers to investigate the impact of COVID on the relationship between gender equality in the workplace and firm's outcome. For instance, how do gender-equality-friendly policies affect a firm's outcome during COVID? In addition, the researcher may consider investigating the relationship between boardroom gender diversity and stock price during the COVID pandemic in various market environments.

### **7. Conclusion**

Despite unprecedented global challenges, gender equality in the workplace has been far too slow and uneven. Most stakeholders recognize the importance of different kinds of educational backgrounds and functional expertise, but they tend to underestimate the benefits of gender diversity. Achieving board gender diversity is likely to generate positive externality. The implementation of gender equality supportive policies, such as appointing females in senior management roles and implementing LGBT hiring campaigns, can give a positive signal to both employees and investors. Ethical postures of this kind have proved to be contributory in building relationships with other stakeholders, which in turn help build the firms' reputation and value creation. Furthermore, from the agency perspective, the board gender diversity could lead to higher independence of directors, resulting in a better board monitoring function on behalf of the shareholders. In other words, board gender diversity could reduce agency cost of the company and again, potentially lead to better firm performance. Firms with gender equality supportive policies tend to provide a less stressful work environment and have lower employee turnover, which in turn enhances human and social capital of the company. Nevertheless, these benefits also come with costs. In some cases, managers may adopt gender equality friendly policy for their own benefit. This leads to several interesting avenues for future research.

*Corporate Governance - Recent Advances and Perspectives*
