Board gender diversity and cost of debt financing: Evidence from Latin American and the Caribbean firms

Abstract

This research examines the relationship between board gender diversity and the cost of debt financing in Latin American and Caribbean firms. We implement the Fuzzy Logistic Autoencoder model, using data for 470 firms spanning 2016–2021 from the Eikon Refinitiv Thomson Reuters database. Our findings suggest that the variables independent board, policy board diversity, sustainable development goal 5, executive gender diversity, and governance consistently demonstrated effects on reducing the short-term and long-term debt cost over the period analyzed. Consequently, the potential benefits of including women on the board of directors are conducive to improving the firm's reputation, which materializes in reducing the cost of debt. The results offer valuable insights to researchers and investors seeking to understand the role of BGD composition within firms and its financial impact.