The purpose of the study is to investigate the association between board gender diversity and narrative disclosure tone (NDT) and the moderating role of firms with more experienced board members and firms with extended board tenure in this association.
This study employs ordinary least squares (OLS) regression techniques to estimate the regression models. Results are based on a sample of 1794 firm-year observations from 2010 to 2018 in the UK context. The study's results are robust after mitigating endogeneity problems using propensity score (PSM), entropy balance matching, and instrumental variables analysis.
The findings of this study indicate that board gender diversity is positively associated with the NDT, which suggests that firms with higher levels of board gender diversity have greater levels of net optimistic tone in their narrative disclosure. Further analyses reveal that the positive association is more pronounced for firms with more experienced board members but less pronounced for firms with extended board tenure. Additional analyses also provide robust empirical evidence that firms with higher levels of board gender diversity have a positive impact on executive directors' NDT. Moreover, the positive link is stronger for firms that have board members with more experience, but it is weaker for firms that have board members with longer tenure.
Our study's findings have significant implications for capital market participants, managers, policymakers, academics, and practitioners worldwide in understanding the implications of narrative disclosures in capital markets.
