Board gender diversity and the cost of equity: What difference does gender quota legislation make?

Sarang, Aitzaz Ahsan Alias; Aubert, Nicolas; Hollandts, Xavier

doi:10.1002/ijfe.2774

Cited by 4 publications

(3 citation statements)

References 100 publications

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“…The results are aligned with previous studies on women director and environmental performance and disclosure nexus documenting that women directors tend to promote sustainable initiatives such as improving sustainable investments and renewable energy consumption (Atif et al, 2020 2021; Liu, 2018). The results also align with previous studies (Cumming et al, 2015; Gul et al, 2013; Sarang et al, 2023; Srinidhi et al, 2011; Taylor et al, 2016) documenting that women directors are associated with greater transparency, less likelihood of fraud, greater earnings quality, fewer earnings management, less tax avoidance, and more disclosure of reliable information.…”

Section: Resultssupporting

confidence: 90%

“…The gender diversity can increase the board effectiveness by enhancing the monitoring quality (Sarang et al, 2021(Sarang et al, , 2023. Carter et al (2003) in the agency context, discuss that a diverse corporate board is more likely to strictly monitors managers, as gender diversity on corporate boards truly enhances the board independence because members with a diverse cultural, ethnic, and gender background are expected to raise questions and issues that otherwise would not have come from a non-diverse board.…”

Section: Composition Of Sustainability Committee and Environmental De...mentioning

confidence: 99%

See 1 more Smart Citation

Sustainability committee and environmental decoupling: International evidence

Gull,

Sarang,

Mushtaq

et al. 2023

Corp Soc Responsibility Env

Self Cite

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This paper examines whether sustainability committees curb environmental decoupling. Using a global sample, we document a negatively significant association between sustainability committee and environmental decoupling. These results support the notion that sustainability committees lower the gap between firms actual and reported environmental performance. With regard to the composition of such a committee, we show that size and tenure are positively associated with the level of environmental decoupling. However, more independent and gender‐diverse committees lower the level of environmental decoupling. Further analysis shows that documented relationship is not subject to the firms' corporate governance quality or industry nature. We also document that less engagement of firms with sustainability committee in decoupling practices tend to enhance their financial performance. The results are robust to endogeneity concerns, and several robustness tests. Our findings offer important implications for academic researchers, consultants, stakeholders, and policymakers.

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Section: Resultssupporting

confidence: 90%

Section: Composition Of Sustainability Committee and Environmental De...mentioning

confidence: 99%

Sustainability committee and environmental decoupling: International evidence

Gull,

Sarang,

Mushtaq

et al. 2023

Corp Soc Responsibility Env

Self Cite

View full text Add to dashboard Cite

show abstract

“…This is mainly due to a deficit in financial experience, which lenders could interpret as risk factors and consequently demand higher interest rates. Benjamin and Biswas (2019) and Sarang et al (2022) further highlight that firms with firms with female board members often struggle to balance their commitment to stakeholders, causing inconsistencies in corporate policies that could raise the cost of debt. From this perspective, Brodmann et al (2022) clarify that alternative financing sources could further aggravate these inconsistencies and increase the risk perception among lenders.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

Palmieri,

Geretto,

Polato

et al. 2024

J Manag Gov

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In this paper, we examine the relationship between alternative finance and board structure on the cost of debt for firms, focusing on the unique effects of differing board characteristics. Using a dataset of 176 European listed companies observed annually from 2013 to 2022, we dissect this relationship through several hypotheses considering factors such as the supply of alternative finance, board gender composition, age, expertise, and board turnover. Our findings reveal that increased alternative finance credit supply escalates the cost of debt, especially for firms with lower ESG scores. Firms with young boards, boards specialized in economics or low, and board turnover also experience a rise in borrowing costs with increasing of alternative finance. Through a pooling 2SLS model, we provide robust evidence about the interplay of alternative finance and varying board structures on the cost of debt. This research clarifies the intricacies of bank-firm relationships in alternative finance and holds significant implications for supervisory authorities, banks, and policymakers. It underscores the necessity of good corporate governance in managing the cost implications of alternative finance. It calls for tailored risk assessment strategies, conducive regulatory frameworks, and vigilant supervisory approaches to create a resilient financial ecosystem where alternative finance can thrive without inordinately inflating the cost of debt.

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Does a co‐opted director affect a firm's financial distress risk?

Sarang,

Rind,

Manita

et al. 2024

Int. J Fin Econ

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This study examines the relationship between co‐opted directors (CODIR), measured as the fraction of directors appointed after the Chief Executive Officer (CEO) assumes office to board size, and firms' financial distress risk (FFDR). Understanding the relationship between CODIR and FFDR is imperative due to the significant impact of high risk‐taking on financial crises and the heightened expectations placed on board members for risk oversight. Despite growing research on corporate governance and FFDR, little attention has been paid to the role of CODIRs, presenting a significant gap in the literature. Using a US sample from 1996 to 2019, covering 13,486 firm‐year observations, we document that CODIR reduces FFDR, supporting the hypothesis that co‐opted directors have a lower financial distress risk‐taking propensity than their non‐co‐opted counterparts. We also find that a critical mass of at least three CODIRs and independent CODIRs reduces FFDR. Our results also document that CEO power in the form of CEO duality and CEO tenure, external monitoring in the form of the number of analysts following the firm, competition, and takeover susceptibility do not drive our main conclusions for co‐option and FFDR. Finally, the results show that CODIR reduces FFDR through liquidity channels. The findings remain robust to various definitions of co‐option and distress risk, and are consistent in both difference‐in‐differences analysis and propensity score matching.

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Board gender diversity and the cost of equity: What difference does gender quota legislation make?

Cited by 4 publications

References 100 publications

Sustainability committee and environmental decoupling: International evidence

Sustainability committee and environmental decoupling: International evidence

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

Does a co‐opted director affect a firm's financial distress risk?

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