Board gender diversity and investment inefficiency

Chang Yu

Journal of Economics and Business, 2023, vol. 124, issue C, No S0148619522000637

Abstract: This paper investigates the effect of board gender diversity on a firm’s investment inefficiency and finds that a firm with at least one female director on its board has significantly less investment inefficiency than firms without one. The fraction of female directors on the board has a significantly negative association with investment inefficiency. The instrumental variable approach and propensity score matching show that this relation is robust after addressing endogeneity concerns. Furthermore, the effect of board gender diversity on investment inefficiency is more pronounced for overinvestment than underinvestment. Consistently, the effect is more substantial for firms that tend to overinvest ex-ante. It also indicates that board independence is a channel for board gender diversity to reduce investment inefficiency.

Keywords: Board of directors; Gender; Diversity; Investment efficiency; Capital investment (search for similar items in EconPapers)
JEL-codes: G31 G34 J16 M14 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:124:y:2023:i:c:s0148619522000637

DOI: 10.1016/j.jeconbus.2022.106107

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