Board gender diversity and cost of equity: Evidence from mandatory female board representation

Chen Jun, Liu Qiyuan, Ma Xiaofang and Zhang, Feida (Frank)

International Review of Economics & Finance, 2023, vol. 88, issue C, 501-515

Abstract: In this paper, we examine whether and how board gender diversity impacts firms’ cost of equity. We predict that firms with greater board gender diversity enjoy a lower cost of equity than firms with less gender diversity due to a larger investor base, less information asymmetry among investors, and more conservative accounting disclosure. We use staggered worldwide boardroom gender diversity reforms as a quasi-natural experiment to conduct a difference-in-differences analysis. Using a large sample of firms from 43 markets, we obtain empirical evidence in line with our prediction. Our results are robust to tests involving alternative samples, specifications, and explanations. Cross-sectional analyses show that the effect of board gender diversity on the cost of equity is less (more) pronounced when firms are more (less) gender-equal, transparent, and conservative in accounting.

Keywords: Mandatory female board representation; Cost of equity; International evidence (search for similar items in EconPapers)
JEL-codes: G15 G34 K22 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:88:y:2023:i:c:p:501-515

DOI: 10.1016/j.iref.2023.06.031

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