Corporate Board Gender Diversity and Financing Decision

Abstract

Based on a total of 1,590 listed non-financial firms on the Taiwan Stock Exchange and the Taipei Exchanges covering the period of 2007~2020, this study examines whether a firm’s financing decision, namely, capital structure policy is affected by corporate board gender diversity. While existing research has explored the effects of a firm’s board diversity on various financial and non-financial consequences, this study argues that board gender diversity contributes to better financial performance and higher social reputation, on the one hand, it allows the firm to borrow more funds or enjoy better loan conditions, and on the other hand, it also leads to a higher level of trust in the firm’s ability to repay debts from its funders. All of these factors make the firm more likely to have a higher level of debt utilization. Through correlation analysis and multiple regression estimation, principal outcome shows that firm with greater degree of board gender diversity tends to use more debt financing in the capital structure decision.