The Role of Political Connections in Moderating the Effect of Board Gender Diversity on Financial Distress in Indonesian Banking Companies

Abstract

This study aims to examine the role of political connections in moderating the effect of board gender diversity and board size on financial distress. The research sample consists of 138 observations from banking sub-sector companies listed on the Indonesia Stock Exchange during the period 2021-2023. The testing was conducted using panel data regression analysis. The findings indicate that gender diversity in the board of commissioners does not affect financial distress, while gender diversity in the board of directors has a positive effect. Additionally, board size has a negative effect on financial distress. Furthermore, political connections do not moderate the effect of gender diversity on the board of commissioners, but they do moderate the negative effect of gender diversity on the board of directors on financial distress. Additionally, political connections can moderate the positive effect of board size on financial distress. These findings may be useful for company management in determining the most effective board composition to improve company performance and avoid financial difficulties.