Does Board Gender Diversity Really Improve Financial Performance and Default Risk? Evidence from Romanian Companies Engaged in International Trade

Currently, in the business world, important attempts are being made to assess the possibility of verifying the creditworthiness of companies by going beyond traditional financial data and incorporating alternative data as well. Does the fact that the board of a company has a certain structure influence the financial health of that company? The paper’s objective is to ascertain if there is a correlation between the board of directors’ gender diversity, financial performance, and the probability of default for that respective company. The empirical study examined a sample of Romanian companies engaged in international trade. Using natural language processing techniques, I predicted the gender of the respective director by his/her first name. The second step of the research was the analysis of the correlation between the percentage of women on the board and traditional financial indicators such as profit or turnover, and the correlation between the percentage of women on the board and that company’s probability of default. The results show that there is generally not a strong correlation between the percentage of women on the board of the company and the other financial and risk indicators at the entire population level, but there is a strong correlation for some specific industries such as education, meaning that there are industries were the presence of women in board really impacts the performance of the business.