Purpose –This paper aims to investigate whether there is a relationship between gender diversity and environmental, social, and governance (ESG) performance. It also examines whether ESG controversies can moderate the relationship between gender diversity and ESG performance relationship. Design/methodology/approach: This study's sample comprises unbalanced panel data on 853 firms listed in the FTSE 350 and the S&P 500 indices, covering the period from 2012 to 2024. This study employed ordinary least squares (OLS) regression and the generalised method of moments (GMM) to test the hypotheses. Findings – The findings indicate a non-significant relationship between female board members and ESG performance. Also, the findings show that ESG controversies negatively moderate the relationship between gender diversity and ESG performance. These findings suggest that the effectiveness of female board members in enhancing ESG performance may diminish when firms face public allegations of negative environmental, social, and governance impacts. Originality/value - The findings contribute to the limited literature by providing new insights and addressing a gap by examining the relationship between board gender diversity and ESG performance, while considering the moderating effects of ESG controversies. This study is also unique in that most prior studies have investigated the impact of board gender diversity on firm financial or ESG performance separately, without accounting for external challenges, such as ESG controversies. Furthermore, this study provides academic evidence that is valuable for policymakers and investors in decision-making and public policy to enhance the ESG performance of firms facing or at risk of ESG controversies.
Doaa Aly (Sat,) studied this question.