Impact of Gender Diversity on the Board of Directors on the Financial Performance of the Chinese Private Water Companies

Introduction

Water is one of the finite resource and fundamental commodity to human well-being and survive the human lives (Reza, 2017; UN, 2015). However, China is facing an acute portable water problem and presents a picture of severe supply constraints because of over use of water, pollution and lots of people living in places that don't have much water (Jiang & Zheng, 2014; Reza, 2017). It is important to note that there are limitations of water supply over 100 cities in China; approximately 60% of China’s 661 cities have been facing seasonal water shortages, and around 20% of the water produced at the water treatment plant has been losing through leaky distribution pipes (Browder et al., 2007). Currently, water supply shortages in China an estimated 40 billion cubic meters. Thus, China has water shortfall cost of $39 billion¹ a year because of lost crops, lower industrial production and stalled economic output. It is noted that China is one of the top countries in terms of water scarcity ranked (Sullivan et al., 2008). China one of the 13 countries most affected by water scarcity. China accounts 20% of the world population with only 7% of is fresh water (World Economic Forum, 2016). Recently, it has been predicted by the Chinese government that water consumption will be increased and 1068 billion tons consumed by 2030 (ASRIA, 2007). The economy of China has been growing day by day. Currently, the Chinese economy is the second largest economy around the world². Thus, the Chinese economy practically now effect the global economy. Water has accepted as a vital natural resource for the continuing economic development of China should be noted (Asia Society Report, 2009). If China is to meet future water challenges, the Chinese water utilities must be dramatically improved (Browder et al., 2007). Hence, the urgent need to increase water supply through government or private sector participation in the Chinese water sector (Lee, 2007). A huge amount of investment is required to improve the infrastructure of the Chinese water industry which is one of the most highly capital and water infrastructure intensive (Olstein et al., 2009). Usually, it is very difficult to provide sufficient financing by the government alone. Hence, private sector investors can contribute to improve the Chinese water sector which is previously discussed in numerous news, articles and research reports inside and outside in China.

In order to achieve this, the Chinese government can do much better the investment in water sector by improving the rules, regulation, policies, and practising good corporate governance. The practice of corporate governance (with gender diversity on board of directors) is strongly influenced by the firm management, shareholders, investors, creditors, employees, and government. Thus, good corporate governance (with gender diversity on board of directors) is expected to provide a better much required reforms regarding investment issues and increase water companies’ performance.