Beyond Quotas: The Influence of Board Gender Diversity on Capital Structure in Firms from Latin America and the Caribbean

Juan David González-Ruiz (), Nini Johana Marín-Rodríguez and Camila Ospina-Patiño
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Juan David González-Ruiz: Finance and Sustainability Research Group, Department of Economics, Faculty of Humanities and Economics, National University of Colombia—Medellín Campus, Medellín 050034, Colombia
Nini Johana Marín-Rodríguez: Financial Engineering Research Group, GINIF, Financial Engineering Program, Faculty of Engineering, University of Medellín, Medellín 050026, Colombia
Camila Ospina-Patiño: Finance and Sustainability Research Group, Department of Economics, Faculty of Humanities and Economics, National University of Colombia—Medellín Campus, Medellín 050034, Colombia

JRFM, 2025, vol. 18, issue 9, 1-32

Abstract: Board gender diversity (BGD) has gained attention as a governance mechanism that may influence corporate financial decisions. However, empirical evidence from Latin America and the Caribbean (LAC) remains limited despite the region’s significant gender disparities in corporate leadership and distinct institutional characteristics. This study examines how BGD affects capital structure decisions in LAC firms, drawing on agency theory and resource dependency theory. We analyze a panel dataset of 403 firms from 2015 to 2022, sourced from the London Stock Exchange Group database, using fixed effects models with Driscoll–Kraay standard errors to control for firm heterogeneity and econometric concerns. Results show that BGD is significantly and negatively associated with leverage ratios, with a one percentage point increase in female board representation corresponding to a 0.15 to 0.25 percentage point decrease in debt-to-capital ratios. This relationship is robust across multiple specifications and exhibits threshold effects, with stronger impacts when female representation reaches 20% or higher. The negative association is more pronounced for larger firms, consistent with enhanced governance benefits in complex organizations. Our findings suggest that gender-diverse boards exercise more effective oversight of financial decisions, leading to more conservative capital structures in emerging markets where governance mechanisms are particularly important for firm credibility and stakeholder confidence.

Keywords: board gender diversity; capital structure; Latin America and the Caribbean; corporate board (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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