Impact of women in the board of directors on business risk of Vietnamese firms

This article aims at assessing the influence of women in the board of directors (BOD) on risk management in Vietnamese firms. The study touches upon a sample of 284 companies listed on the HOSE (Ho Chi Minh City Stock Exchange Vietnam) in the period of 2008-2014. Their data was regressed by the random effects model (REM) and the fixed effects model (FEM). To find out which method is the most appropriate, we used the Hausman test. The study clarifies women’s role in society and the optimal ratio of women in the BOD to minimise risks at enterprises. The authors give recommendations to corporate managers regarding proper employment policies, in which the role of women is better recognised. The most valuable result of the presented research is a grounded finding of an optimal female ratio in the BOD recommended for the Vietnamese enterprises. In order to achieve a positive impact of women on the risks reduction at the enterprise, the suggested female ratio in the BOD should be 34.96%, which will help to keep the lowest risk exposure. Hence, it could be recommended to raise a number of women in the BODs to approximately 1/3 of the total amount of members. Business owners may take this into account when planning human resource policies to maximise business performance.