Purpose
The purpose of this paper is to examine the impact of board gender diversity on bond terms and bondholders’ returns.
Design/methodology/approach
The authors perform pooled OLS regression, simultaneous regressions and propensity score matching to a panel data set of bond data for 319 US firms from 2007 to 2014.
Findings
The authors find that firms with gender-diverse boards have lower yields, higher ratings, larger issue size and shorter maturity. They also find that bondholders require fewer returns from firms with gender-diverse boards. However, the effect is more pronounced when women, constitutes at least 29.67 percent of the board.
Originality/value
This analysis supplements the findings that board gender diversity is essential for bondholders. It shows that bondholders should look at board gender diversity as a criterion to invest because bonds issued by firms with gender-diverse board have less risk. For practitioners, this study shows that more women participation on boards leads to a reduction in borrowing costs.
We examine the impact of social capital on board gender diversity among U.S. firms. We test whether trust and social networks in a county lead to an increase in female board representation. We find that firms headquartered in high‐social‐capital counties have higher diversity in their corporate board. Economically, we estimate that a 1 standard deviation (SD) increase in social capital leads to a 0.042 SD increase in board gender diversity. We contribute to the literature by extending the evidence on board gender diversity determinants to informal institutions.
Extant literature reports mixed findings on the relative efficiency of credit default swaps (CDS) and bond markets in pricing emerging market sovereign credit risk. Using a more comprehensive data set than analyzed earlier, we reexamine this issue and find that CDS dominate bonds in the price discovery of this risk, an advantage we attribute to the greater relative liquidity of that market. One exception is during the financial crisis, suggesting that when panic hits, sovereign markets price credit risk differently. However, even then, the CDS market has a greater impact on price discovery than the bond market, indicating greater overall efficiency. JEL Classification: G11, G12, G13, G14, G23
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.