Board Attributes and Firm Profitability: Moderating Role of Board Diversity

Abstract

The study investigates the association between board attributes and firm profitability. To illustrate the links, the case of listed nonfinancial companies on the Dhaka Stock Exchange is examined between 2018 and 2022. To effectively manage the concern of endogeneity, the generalised method of moments (GMM) is used as the econometric technique in this research. The study reveals that, among the attributes of the board, board size and gender diversity have positive and significant effects on profitability; however, the effect of directors' independence on profitability is not significant. Further, the study finds that gender diversity enhances the relationship between board size and profitability, with a compounding effect. The outcome of this study suggests that although gender diversity enhances the power of board size, it has yet to demonstrate effectiveness in the power of board independence.