Board gender diversity and cash holding: the effect of family ties

Gema del C. Fleitas-Castillo (), Jerónimo Pérez-Alemán () and Domingo Javier Santana-Martín ()
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Gema del C. Fleitas-Castillo: University of Las Palmas de Gran Canaria
Jerónimo Pérez-Alemán: University of Las Palmas de Gran Canaria
Domingo Javier Santana-Martín: University of Las Palmas de Gran Canaria

Review of Managerial Science, 2025, vol. 19, issue 4, No 6, 1193 pages

Abstract: Abstract Using a sample of 630 firm-year observations of non-financial Spanish listed companies for the period 2004–2020, this study examines linkages of family and non-family female directors and cash holding. We show that family and non-family female directors affect cash holdings differently. When the presence of family female directors is scarce, their role is eclipsed, thereby encouraging actions related to family goals and increasing cash holdings. However, when the presence of family female directors reaches a critical mass, the cohesion between the interests of the dominant family and external investors increases, thereby reducing the level of cash holdings. When the number of non-family female directors is low, the cash level of family firms is reduced, suggesting that non-family female directors encourage the family firm’s cash reduction as a result of their greater capacity to control and their orientation towards an effective corporate governance system. This cash-decreasing effect will occur even if the number of non-family female directors is low, since the purpose of appointing non-family female directors is less likely to be symbolic. In addition, non-family female directors are concerned about threats to reputational capital, such that reducing cash holdings would promote their reputation as credible supervisors, protect their current appointments, and also boost the likelihood of future appointments. However, the presence of a critical mass of non-family female directors becomes a sufficiently powerful instrument of control and legitimation for external investors, allowing for increased cash levels without increasing agency conflicts.

Keywords: Gender; Cash holding; Board of directors; Family ties (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11846-024-00788-4

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