Gender diversity on boards and earnings forecast accuracy: insights from India

Purpose: This paper explores the relationship between gender diversity on corporate boards and the accuracy of analysts’ earnings forecasts. The study focuses on gender-diverse boards as effective monitors, which are expected to influence corporate disclosures, reducing information asymmetry positively and improving forecast accuracy. The unique context of India’s gender quota policy on corporate boards and its relatively weak corporate governance structure offers an ideal setting to investigate this relationship. Design/methodology/approach: The study utilises the generalised method of moments dynamic panel regression to address this research objective, analysing data from 217 Indian firms listed on the National Stock Exchange from 2014 to 2019. Findings: The findings reveal that greater gender diversity on corporate boards positively impacts forecast accuracy. Specifically, having more women directors on the board enhances forecast accuracy, with a critical mass of women directors (more than one woman) further amplifying this effect. The study also shows that independent women directors significantly improve forecast accuracy, whereas grey women directors (those with family connections or non-independent roles) negatively affect it. Originality/value: This study contributes significantly in two key aspects. Firstly, it sheds light on the value of women directors on boards in a country where women’s representation is mandated. Secondly, the research highlights the crucial role of independent women directors in ensuring robust financial oversight, particularly in an emerging economy.