GOVERNING VALUE THROUGH GENDER DIVERSITY: HOW WOMEN ON BOARDS DRIVE FIRM PERFORMANCE IN INDONESIA

Abstract

This article examines whether the composition of corporate boards particularly the inclusion of women directors has measurable implications for firm value among non-financial companies listed on the Indonesia Stock Exchange (IDX) over the 2018–2023 period. Anchored in principal agent theory and the resource-based view of the board, the study posits that gender-inclusive governance structures generate superior oversight quality and broader access to strategic resources, ultimately translating into enhanced market valuation. Panel data covering 193 companies yielding 1,158 firm-year observations were analyzed using pooled ordinary least squares regression with heteroscedasticity-consistent standard errors (HC3), accompanied by comprehensive model selection diagnostics (Hausman and Breusch-Pagan tests) and endogeneity discussions. Two complementary proxies for gender composition were employed: an aggregate composite board gender diversity index (Blau Index) and the proportion of female directors on the board. Empirical results confirm that both measures exert statistically significant positive effects on Tobin’s Q. Specifically, a marginal increment in the gender diversity score corresponds to a 0.1721 improvement in Tobin’s Q (significant at the 1% level), while each percentage-point rise in female board representation is associated with a 0.0061 increase in market-to-book value (significant at the 5% level). Diagnostic analysis reveals that multicollinearity among governance variables is minimal (mean VIF = 1.34), and the substantial divergence in explanatory power between Model 1 (Adj. R² = 0.5653) and Model 2 (Adj. R² = 0.0369) underscores the superiority of composite diversity metrics over linear headcounts in capturing complex governance dynamics. Strategic recommendations are provided for nomination committees, institutional investors, and capital market regulators in emerging market settings.