BOARD GENDER DIVERSITY AND GREEN BOND ISSUANCE: COMPARATIVE EVIDENCE FROM MALAYSIA AND PAKISTAN

Abstract

This paper examines the effect of board gender diversity on green bond (GB) issuance within emerging markets, with a particular emphasis on Malaysia and Pakistan. With a focus on sustainability and corporate social responsibilities in the world financial markets, it is essential to investigate the effect of gender diversity within boardrooms on sustainable-related financial product. In this study we investigate the impact of gender-diverse boards on firm participation in green bond issuance, an innovative financial instrument for financing projects with positive environmental benefits. Adopting a comparative research setting, we examine myopic practices of both Malaysian and Pakistani listed firms that highlight contrasting institutional backgrounds in terms of governance practices, market development and regulations. Based on agency theory and resource-based view, we argue that board gender diversity has a positive effect on decision-making quality and proactive environmental strategies which in turn leads to a higher likelihood of GB issuance. Our results indicate that there is a significant positive relationship between the gender diversity of boards and green bond issuance, although with different patterns across our countries which depend on the cultural, economic and institutional frameworks. This article advances knowledge on the contribution of corporate governance to sustainable finance as well as gives practical implications for regulators, investors and corporate managers to encourage sustainability in emerging economies.

Keywords: Board Gender Diversity, Green Bond Issuance, Sustainable Finance, Emerging Markets, Agency Theory, Resource Orchestration