GENDER DIVERSITY, FINANCIAL EXPERTISE, CEO DUALITY AND FIRM PERFORMANCE: EVIDENCE FROM INDONESIAN PUBLIC LISTED COMPANIES

This study aims to examine gender diversity, financial expertise, CEO duality on company performance in Indonesia. The author uses panel data testing with three years starting from 2018 - 2020 using STATA software. Panel data testing was carried out by conducting three tests: common effect model, fixed-effect model, and random effect model, including the model selection test, namely the Chow test, the Hausmann test, and the Breusch pagan LM test. The author also tested by conducting factor analysis with principal component analysis to carry out a linear transformation to change from most of the original variables used (ROA & ROE), and make them correlated into a new set of variables (firm performance). The results of this study conclude that the gender diversity variable has no effect on firm performance, but the variables of financial expertise and CEO duality affect firm performance.


Introduction
The impact of the characteristics of the board of directors on company performance has received significant attention in the economic and financial literacy in recent times were increased research on this has been motivated by the cases of major financial scandals that occurred in the United States such as the cases of World com and Enron.Current global business practices, pay more attention to corporate governance in which indicators of the board of directors' characteristics are the most crucial part (Shukeri et al., 2012).However, the problem that arises is whether the board's characteristics will affect the company's performance is still a question today.In Indonesia, several companies are operating successfully.However, some companies experience losses while macro and political conditions were considered constant.If viewed from the internal company, we can see the problem assumptions that cause the company to experience a loss or a poor firm performance.
It was suspected that board characteristics play a role in the decision-making process and company operations.The characteristics of the board in this study are to use gender diversity, financial specialization, and CEO duality.
Several studies have shown that gender diversity can influence firm performance.Research results from Lückerath-Rovers et al. (2013) show that female directors' performance is better than the male gender in companies in the Netherlands.Research by Agyemang-Mintah et al. (2019) show that the presence of women on the board of directors of financial institutions in the UK has a positive and significant impact in the moments before the crisis in 2000 to 2006; however, after the financial crisis, it shows that the presence of female gender on the board of directors has no significant effect on company performance.Research by Isidro et al. (2015) shows that a more excellent gender representation of women on corporate boards in Europe can indirectly increase corporate value and company performance.Research conducted by Arayssi et al. (2016) also shows that the presence of women on the board of directors positively affects the company's risk and performance by promoting corporate investment through their social media.Research conducted by Kılıç et al. (2016) also shows that gender diversity has a relationship with company performance in Turkey even though the numbers are still relatively small.Research conducted by Solakoglu et al. (2016) shows that gender diversity affects companies' financial performance in the financial sector in Turkey.
In contrast to the results of other studies, according to Shukeri et al. (2012) that there is no relationship between gender diversity and CEO duality on company performance.Then research conducted by Darmadi (2013b) Agung Prasetyo Nugroho Wicaksono Volume 16 Nomor 1 Halaman 1-14 Halaman 3 shows that the representation of female gender directors' performance is not related to company performance.Based on the findings, it is also concluded that relatively small companies tend to be controlled by families regardless of gender.On the other hand, large companies provide a more significant opportunity to have female board members.The results of research by Hogan et al. (2019) concluded that gender and ethnic diversity have a lower impact on company performance of real estate companies.
Previous research has also examined the effect of financial specialization on firm performance.Research results from Darmadi (2013a), Rubin (2017), Sun et al. (2013), and Sun et al. (2015) show that directors who specialize in finance affect company performance.
According to the results of their research, a BOD, CFO (chief financial officer), finance manager, or accounting manager who has expertise in finance or accounting such as study experience, practitioners, and CPA licenses will have an impact on company performance through financial analysis and appropriate decision making so that the increase in company performance can increase the earnings per share of the company.
The research results related to the impact of CEO duality on company performance (Hsu et al., 2019;Rutledge et al., 2016;Shrivastav et al., 2016).They found that there is a negative relationship between CEO duality and company performance.By including the gender diversity variable, financial specialization and CEO duality are expected to become crucial corporate governance mechanisms that determine whether the company's performance is good or bad.However, there are also previous research results that show that CEO duality has a positive effect on company performance, where CEO duality can increase the resources needed by the company to improve company performance (Chang et al., 2019;Duru et al., 2016;Wijethilake et al., 2019).
Can gender characteristics have such a significant impact on the organization that it improves performance?, Finkelstein et al. (1996) suggest two reasons why the board of directors' composition can affect the performance of a company.First, the board of directors has the most significant influence on strategic decision making in a company.Second, the board of directors also has a supervisory role in the company's operations, representing shareholders where they must respond quickly and appropriately to takeover threats and monitor the company's overall value.Given that each board member jointly determines the decision making on the board, the composition of the board of directors can affect the performance of a company.
The illustrate of diversity in the context of corporate governance is made up of the board members' composition and the combination of their qualities, characteristics of the board Halaman 1-14 Halaman 4 members, and the different skills of each board member related to how the board member work (Van der Walt et al., 2003).Therefore, the sex of board members is only one part of the diversity characteristic.This study only focuses on gender because gender is the most easily mapped or distinguished demographic characteristic compared to other characteristic indicators such as age, nationality, education, or cultural background.Brown et al. (2004) argue that if good corporate governance does not result in increased performance, then the big question that arises is who occupies the company's board of directors?or how the board has no practical value in operating the company?Furthermore, does appoint women as councils have any effect, or is it just a symbolic meaning?So research on the existence of women on the board of directors is directly related to aspects of corporate governance, including the importance of a good relationship between management with directors and stakeholders, as suggested by stakeholder theory (Donaldson et al., 1991) and resource dependency theory (Nienhüser, 2008;Salancik et al., 1980).
Resource dependency theory considers the board on the company as an essential link between the internal company and the environment outside the company (external) and external resources on which the company depends on it.Using the board of directors as a stakeholder engagement mechanism will provide four advantages for the company (Nienhüser, 2008;Salancik et al., 1980): first, it can provide useful information for the organization; second, able to provide a channel for communication purposes; third, the linkage is an essential step in obtaining commitment support from important environmental or external elements; and fourth, the linkage has value in legitimizing an organization.Based on the explanation of the theory and statement above, the research hypothesis proposed is H1: Gender diversity on the board positively affects firm performance.
The next theory used in this study is to use the resource-based view (RBV) theory.Through RBV, companies can build sustainable competitive advantage through heterogeneous resources (J.B. J. J. o. m.Barney, 2001;Rubin, 2017).The RBV concept emphasizes that a company's competitive advantage based on resources and capabilities will last longer in running its business, rather than merely relying on product/market positioning.Resources in question are company resources in financial, human (labor), physical facilities, and knowledge.The RBV concept relies heavily on resources from unique, valuable, and difficult to replicate to create a competitive advantage.
In the RBV concept, the focus of attention is internal resources.According to J. B. J. J. o. m.Barney (2001), the success of an organization is determined by internal resources, which are grouped into three categories, namely: 1. Physical resources, including factory, equipment, location, technology, and raw materials.
2. Human resources, including all employees, along with their training, experience, intelligence, knowledge, skills, and abilities.
3. Organizational resources, including company structure, planning processes, information systems, patents, trademarks, copyrights, databases, and so on.
Based on the RBV theory above, namely that human resources in a professional and complete organization where the individual has the expertise, intelligence, knowledge, and experience with their work, will result in better productivity to improve organizational performance and execute various problems an objective.Not only that, but the policies issued are also better and objective because of the impact of the expertise of each individual who has better resources.
Managers who are at the top of their positions may be hired because of their superior abilities.
According to Bhagat et al. (2010), this ability consists of characteristics that can be observed directly (for example, seen from their educational background and work experience) and can also be seen from characteristics that cannot be observed directly (for example, their leadership style, and skills).They argue that because the characteristics that cannot be observed directly are indicators that are relatively difficult to identify and measure, the characteristics that can be observed directly play an essential role in this.Hambrick et al. (1984) also state that observable characteristics are considered valid proxies for their cognitive orientation, values, and knowledge base, which can significantly influence decision-making and managerial behavior.Therefore, the level of education is often seen as a good proxy for measuring human capital, knowledgebase, or intellectual competence (Darmadi, 2013a;Hambrick et al., 1984;Rubin, 2017;Sun et al., 2015;Sun et al., 2013).With this theory and the results of previous research, the second hypothesis proposed in this study is H2: Financial specialization on the board positively affects firm performance.
The final theory used in this study is agency theory, which argues that the board of commissioners must be independent of the board of directors and management so that interest speculation does not occur (Brown et al., 2004;Chang et al., 2019;Donaldson et al., 1991;Duru et al., 2016;Hsu et al., 2019;Jensen et al., 1976;Shrivastav et al., 2016).If there is a violation related to independence, it will harm company performance.This is because the board of commissioners, who also acts as the board of directors, can weaken the board of commissioners' potential to monitor the board of directors and management effectively and efficiently.Halaman 1-14 Halaman 6 Conversely, there are several opinions from various organizational and management theorists who argue that CEO duality can also improve company performance based on the stewardship theory as described by J. Barney (1990) and Donaldson et al. (1991), whose theory is also part of the theory.The agency where this theory argues that management is not motivated by individual goals, but instead aimed at joint outcomes for the organization's benefit.This theory assumes that there is a strong relationship between individual goals and organizational success.The success of an organization is described by maximizing the interest of the group between principals and management.By maximizing the fulfillment of these groups' interests will maximize the interests of individuals in each of these groups of organizations.
Stewardship theory argues that non-financial factors such as intrinsic satisfaction from a company's achievements, external recognition of company performance, respect or appreciation from external parties and reputation for the company will motivate CEOs to increase the value of their companies by using a combination of identities with status as directors to manage company resources so much better.This is also consistent with the expansion or theory development of the resource dependency theory.Salancik et al. (1980) emphasized that the policies provided by dual leadership can increase the CEO's ability to  (2019).So based on the above statement, the third hypothesis proposed in this study is H3: The duality of the CEO on the board positively affects firm performance.

Method
This study uses secondary data obtained from the Indonesia Stock Exchange (IDX).The data used are summary report data of listed companies and company annual reports for three  The dependent variable used in this study is the company's performance as measured using ROE and ROA (Duru et al., 2016;Hogan et al., 2019;Hsu et al., 2019;Kılıç et al., 2016;Lückerath-Rovers et al., 2013;Rutledge et al., 2016;Shukeri et al., 2012;Solakoglu et al., 2016).The test conducted in this study is different from how to test previous research; the dependent variable used in this study is the firm performance variable obtained by testing the principal component analyst (PCA) of return on assets (ROA) with return on equity (ROE).
The use of the PCA method is a statistical technique that linearly changes the form of a set of original variables into a smaller, uncorrelated collection of variables representing information from the original set of variables (Dunteman, 1989).Meanwhile, according to Tabachnick et al. (2001), PCA is a statistical technique applied to a set of variables when the researcher is interested in finding which variables in the group are related to others.The ROE value is obtained by dividing the value of the company's net income by the value of the company's equity.The ROA value is obtained by dividing the value of its net income by the value of its total assets.The statistical analysis test tool used in this study is to use STATA 15.Arayssi et al., 2016;Darmadi, 2013b;Hogan et al., 2019;Isidro et al., 2015;Kılıç et al., 2016;Lückerath-Rovers et al., 2013;Shukeri et al., 2012;Solakoglu et al., 2016).A dichotomy or dummy variable measures the financial expertise variable and CEO duality variable (Chang et al., 2019;Darmadi, 2013a;Duru et al., 2016;Hsu et al., 2019;Rubin, 2017;Rutledge et al., 2016;Shrivastav et al., 2016;Sun et al., 2015;Sun et al., 2013;Wijethilake et al., 2019).The control variable used in this study is the company's size, which is proxied by the log value of the company's total assets.This variable was chosen because relatively large companies have more complex corporate governance than relatively small companies.
The following is an equation model that is formed:

Result and Discussion
Table 3 shows the results of descriptive statistics from the balanced panel data for the research sample of 444 with 148 individuals for three years.The maximum value of the ROE variable is 1.849665, the minimum value is 0.0003745, and the mean value is 0.2585887.The mean value of the gender diversity variable is 0.7339865, and the mean financial expertise is 0.1486486, mean CEO duality is 0.1554054 with the same maximum and minimum value between the three variables.
react more quickly and respond to various symptoms in dynamic business processes and secure resources essential for the success of the company.Taken together, stewardship and resource dependency theories predict a positive relationship between CEO duality and firm performance.This has also been supported by the results of research conducted byChang et al. (2019),Duru et al. (2016),Hsu et al. (2019),Shrivastav et al. (2016) dan Wijethilake et al.
years, for 2018 -2020.The selection of years is based on the limit of data information availability.Disclosure of financial statements listed in the Summary Report of Listed Companies on the Indonesia Stock Exchange (IDX) in 2020.The study population was all companies listed on the Indonesia Stock Exchange for the non-financial services sector based on 2020.The non-financial services sector was chosen because of information, and The measurement criteria of financial reporting are easy to identify.In this study, the sample selection method uses a purposive sampling technique where the researcher selects a sample from the population-based on specific criteria below.

Table 2 : Variables Description
(Agyemang-Mintah et al., 2019;uality.The Gender diversity variable is measured using the proportion of female directors to the total number of directors(Agyemang-Mintah et al., 2019;