Board Gender Diversity and the Cost of Equity: From Tokenism to Critical Mass

Aitzaz Ahsan Alias Sarang, Nicolas Aubert () and Xavier Hollandts ()
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Aitzaz Ahsan Alias Sarang: CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon
Xavier Hollandts: CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA [2017-2020] - Université Clermont Auvergne [2017-2020], Kedge BS - Kedge Business School

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Abstract: This study examines the relationship between board gender diversity and the cost of equity. Investigating a French sample of listed firms on the SBF 120 index over the period 2001 to 2015, we document a significant negative effect of women directors on the cost of equity. Our results also document that the effect of women directors on the cost of equity is significant for firms that have at least three women on their corporate boards. We also find that the relation between board gender diversity and the cost of equity is significant for the period after the implementation of the mandatory gender quota law, whereas it is insignificant for the period before it. These findings validate the notion that the case for more women directors' rests on an economic rather than a social consideration. The study provides significant intermediate results in relation with the Copé-Zimmermann law and the results are robust to alternate specifications and tests.

Keywords: Capital of Equity; Gender Quota; Women Directors; Critical Mass (search for similar items in EconPapers)
Date: 2019-06
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Published in 36e Conférence internationale de l’Association française de finance, Jun 2019, Québec, Canada

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02446631

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