Enhancing corporate resilience: the impact of female board representation on financial distress in Jordanian companies

Purpose

This paper examines the impact of board gender diversity on the likelihood of financial distress in 90 Jordanian companies listed on the Amman Stock Exchange from 2010 to 2021.

Design/Methodology/Approach

To examine our hypotheses, we utilized the Panel Logistic Regression. In addition, we employed the Two-staged Heckman Regression Model as a robust check. To proxy for the financial distress, the 2005 version of Altman's Z-score for emerging markets was employed.

Findings

Our results indicate that female directors can reduce the likelihood of financial distress in Jordanian listed companies. These findings align with previous literature that highlights the benefits of female directors on corporate boards.

Originality/Value

This study, the first to examine the impact of board gender diversity on financial distress in Jordan and the Middle East, highlights several practical implications. It emphasizes the need for policymakers to develop regulations that promote gender diversity on corporate boards as a strategy to enhance stability and prevent financial distress. For corporate managers, incorporating more women into board roles could strengthen decision-making and risk management. Regulators are advised to support these changes through improved governance codes. Additionally, increasing female board participation could enhance corporate responsibility, reduce bankruptcy risks, and boost overall economic stability, benefiting society at large.