Do Female Directors Bridge Sustainability and Profitability? Evidence From MENA Firms

This study explores the nexus between carbon performance, gender diversity on corporate boards, and financial outcomes within the context of emerging MENA economies. Grounded in stakeholder theory and resource dependence theory, it examines whether female board representation serves as a mediating mechanism in the relationship between carbon reduction efforts and firm financial performance. Using a panel of 94 non‐financial firms from 2015 to 2022, the study employs two‐stage least squares (2SLS) to address endogeneity concerns and structural equation modeling (SEM) to assess both direct and indirect relationships. The empirical results reveal a positive and significant association between carbon performance and firm value, particularly in market‐based measures. However, the mediating role of female directors appears limited, with partial attenuation of the carbon–finance link, suggesting a modest and context‐dependent influence. These findings challenge the assumption of universally positive effects of gender diversity on firm outcomes and highlight the constraints faced by women in corporate governance across the MENA region. By offering rare evidence from under‐researched economies, this study contributes to sustainability and governance scholarship and emphasizes the need for inclusive governance mechanisms that go beyond symbolic representation. Strengthening the strategic role of female directors is essential to advancing both environmental and financial sustainability in transitional markets.