Female directors and the cost of debt: does gender diversity in the boardroom matter to lenders?

2019 ◽  
Vol 34 (4) ◽  
pp. 374-392 ◽  
Author(s):  
Muhammad Usman ◽  
Muhammad Umar Farooq ◽  
Junrui Zhang ◽  
Muhammad Abdul Majid Makki ◽  
Muhammad Kaleem Khan
Keyword(s):  
Least Squares ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Cost Of Debt ◽  
Least Squares Regression ◽  
Two Stage ◽  
Loan Default ◽  
Content Type ◽  
Female Directors ◽  
The Cost

Purpose This paper aims to investigate the question concerning whether gender diversity in the boardroom matters to lenders or not? Design/methodology/approach To answer this question, the authors use the data from 2009 to 2015 of all A-share listed companies on the Shanghai and Shenzhen stock exchanges. The authors use ordinary least squares regression and firm fixed effect regression to draw our inferences. To check and control the issue of endogeneity the authors use one-year lagged gender diversity regression, two-stage least squares regression, propensity score matching method and Heckman two-stage regression. Findings The results suggest that the presence of female directors on the board reduces managerial opportunistic behavior and information asymmetry and, consequently, creditors’ perceptions about the probability of loan default and the cost of debt. The authors find that lenders charge 4 per cent less from borrowers that have at least one female board member than they do from borrowers with no female board members. The authors also find that the board structure (i.e. gender diversity) of government-owned firms also matters to lenders, as government-owned firms that have gender-diverse boards have a lower cost of debt (i.e. 5 per cent lower interest rate). Practical Implications The findings have implications for individual borrowers and for regulators. For example, borrowers can get debt financing at lower rates by altering their boards’ composition (i.e. through gender diversity). From the regulatory perspective, the results support recent legislative initiatives around the world regarding female directors’ representation on boards. Originality Value This paper makes several contributions. First, beyond the recent studies on boardroom gender, the authors investigate the relationship between gender diversity in the boardroom and the cost of debt. Second, the authors extend the literature on the association between government ownership and cost of debt by first time providing evidence that the board composition (e.g. gender diversity) of government-owned firms also matters to the lenders. The other contributions are discussed in the introduction section.

Continuous disclosure and information asymmetry

2015 ◽  
Vol 28 (2) ◽  
pp. 195-224 ◽  
Author(s):  
Mark Russell
Keyword(s):  
Information Asymmetry ◽  
Least Squares ◽  
Design Methodology ◽  
Ordinary Least Squares ◽  
Bad News ◽  
Least Squares Regression ◽  
Two Stage ◽  
Ordinary Least Squares Regression ◽  
Content Type ◽  
High Information

Purpose – This paper aims to examine whether firms with high information asymmetry disclose more information under a continuous disclosure regime, and, second, the paper examines whether continuous disclosures reduce information asymmetry. Design/methodology/approach – The study models relations between continuous disclosures and information asymmetry using ordinary least squares regression and two-stage least squares regression. Findings – The study finds firms with high information asymmetry disclose more information. Further, the study finds that disclosure in the presence of high information asymmetry increases asymmetry. Finally, while bad news increases information asymmetry, the disclosure of firm-specific good and bad news is associated with reduced information asymmetry. Originality/value – The paper identifies conditions under which Continuous Disclosure Regime increases information in markets and influences information asymmetry.

Do females in audit firm governance affect firm performance? Findings from Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Murat Ocak
Keyword(s):  
Firm Performance ◽  
Least Squares ◽  
Design Methodology ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Audit Firm ◽  
Hierarchical Levels ◽  
And Gender ◽  
Practical Implications

Purpose This study aims to contribute to the literature by offering a different sector and emphasising the importance of females in audit firm (AF) governance on audit firm performance (AFP). Design/methodology/approach Ordinary least squares (OLS) and instrument variables regression (IVREG) with two-stage least squares are used to test the paper’s hypotheses. Findings Both OLS and IVREG estimation results show that both the proportion of females and gender diversity at board and owner levels and the total number of shares of female owners seem to enhance the performance of AFs. Practical implications These results may be important for policymakers and regulators to set a quota for women’s representation on AF governance or decide arrangements for women in AFs as in the regulations for the high hierarchical levels of other corporate firms. Originality/value This paper extends the current literature in the context of AFs in Turkey, positing that females in AF governance might enhance performance to a great extent.

Gender diversity on audit committees and its impact on audit fees: evidence from India

2019 ◽  
Vol 32 (4) ◽  
pp. 568-586 ◽  
Author(s):  
Seema Miglani ◽  
Kamran Ahmed
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Gender Diversity ◽  
Audit Fees ◽  
Ordinary Least Squares ◽  
Audit Committees ◽  
Women Directors ◽  
Least Squares Regression ◽  
Content Type ◽  
Financial Expert

Purpose The purpose of this study is to examine the relationship existing between gender diverse (women directors) audit committees and audit fees. Design/methodology/approach The authors use a sample of 200 listed Indian firms over a four-year period (2011-2014). Ordinary least squares regression is used to assess whether and how the presence of women directors on audit committees affects the fee paid to the external auditor in India. To deal with the self-selection bias, the authors use a two-stage model developed using Heckman’s (1976) method. Findings The results show a significant positive relationship between the presence of a woman financial expert on the audit committee and audit fees after controlling for a number of firm-specific and governance characteristics and potential endogeneity with the propensity-matching score analysis. From the demand-side perspective of audit pricing, the results indicate that women financial experts on audit committees increase the need for assurance provided by external auditors. Using interaction terms, the authors find that women with financial expertise on an audit committee have a stronger association with audit fees as entity becomes more complex. Research limitations/implications The findings suggest that audit committees with women financial experts are likely to demand higher audit quality, ceteris paribus. Practical implications Gender of the financial expert is critical to the audit committee’s effectiveness. The findings of this study have implications for the composition of an audit committee in a firm. Originality/value This study contributes to the extant literature by examining the less-researched topic of the association between the women representation on audit committees and audit fees. It also offers further empirical evidence that will influence the debate on the importance of gender diversity in corporations.

scholarly journals Voluntary appointment of independent directors: evidence from Taiwan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mao-Feng Kao ◽  
Lynn Hodgkinson ◽  
Aziz Jaafar
Keyword(s):  
Corporate Governance ◽  
Least Squares ◽  
Research Work ◽  
Ordinary Least Squares ◽  
Independent Directors ◽  
Parameter Estimates ◽  
Two Stage ◽  
Data Set ◽  
Content Type ◽  
Two Stage Least Squares

Purpose Using a data set of Taiwanese listed firms from 2002 to 2015, this paper aims to examine the determinants to voluntarily appoint independent directors. Design/methodology/approach This study uses panel estimation to exploit both the cross-section and time-series nature of the data. Further, this paper uses Tobit regression, generalized linear model (GLM) in the additional analysis and the two-stage least squares to mitigate for a possible endogeneity issue. Findings The main findings show that Taiwanese firms with large board sizes tend to voluntarily appoint independent directors and firms that already have independent supervisors more willingly to accept additional independent directors onto the board. Furthermore, ownership concentration and institutional ownership are positively associated with the voluntary appointment of independent directors. On the contrary, firms controlled by family members are generally reluctant to voluntarily appoint independent directors. Research limitations/implications The findings are important for managers, shareholders, creditors and policymakers. In particular, when considering the determinants of the voluntary appointment of independent directors, the results indicate that independent supervisors, outside shareholders and institutional investors are significant factors in influencing effective internal and external corporate governance mechanisms. This research work focuses on the voluntary appointment of independent directors. It would be interesting to compare the effectiveness of voluntary appointments with a mandatory appointment within Taiwan and with other jurisdictions. Originality/value This study incrementally contributes to the corporate governance literature in several ways. First, this study extends the earlier research by using a more comprehensive data set of non-financial Taiwanese firms and using alternative methodologies to investigate the determinants of voluntary appointment of independent directors. Second, prior studies tend to neglect the possible issue of using a censored and fractional dependent variable, the proportion of independent directors, which might yield biased and inconsistent parameter estimates when using ordinary least squares regression estimation. Finally, this study addresses the relevant econometric issues by using the Tobit, GLM and the two-stage least squares for a possible endogeneity concern.

The impact of government ownership on the cost of debt and valuation of Vietnamese listed companies

2020 ◽  
Vol 32 (2) ◽  
pp. 255-270
Author(s):  
Ben Le
Keyword(s):  
Instrumental Variable ◽  
Ordinary Least Squares ◽  
Firm Valuation ◽  
The Other ◽  
Cost Of Debt ◽  
Government Ownership ◽  
Content Type ◽  
The Cost ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the impact of government ownership on the cost of debt and firm valuation in listed Vietnamese companies for the period 2007 to 2016. Design/methodology/approach The authors use both the generalised methods of the moment (GMM) and the ordinary least squares (OLS) regressions to analyse a panel data spanning over the period 2007 to 2016 in the markets of Vietnam. Further, the instrumental variable is used in the paper. Findings The authors find that firms with relative higher government stockholdings or state-owned companies where the government owns 50 per cent or more of shares outstanding enjoy a lower cost of debt compared to the other firms. Consequently, these firms have higher firm valuation and profitability. The results are robust for both the GMM and the OLS regressions. Further, firms that no longer retain government ownership have a higher cost of debt than the other firms. The results of the paper imply the importance of political connections in businesses in the market of Vietnam. Originality/value This paper connects the relationship between government ownership and the cost of debt with the relationship between government ownership and firm valuation. The paper tests the relationship between the cost of debt and government ownership using both OLS and GMM specifications and the results are robust for both approaches. The manuscript uses an instrumental variable to show that government ownership has a positive impact on higher firm performance through reducing cost of debt. Further, this paper addresses the possible issue of endogeneity.

Board gender diversity, board compensation and firm performance. Evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taha Almarayeh
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Least Squares ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Firm Financial Performance ◽  
Board Compensation ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to analyze the relationship between board gender diversity, board compensation and firm financial performance in the developing country, Jordan, whose cultural, economic and institutional context is very different from most previously analyzed countries’ context. Design/methodology/approach Ordinary least squares regression was used to examine the association between board gender diversity, board compensation and firm financial performance in a sample of 510 firm-year observations during the years 2009–2018. Generalized least squares estimation method was used to confirm that the results are robust. Findings The author provides new evidence that board gender diversity does not contribute to firm financial performance. The author also detects that there is a positive relationship between board compensation on firm financial performance. Originality/value This paper examines the under-researched relationship between board gender diversity, board compensation and firm financial performance. In so doing, the author tries to provide new insights into this relationship within the developing context, the case of Jordan that has a different environment from that of advanced markets. To the best of the researcher’s knowledge, this is almost certainly the first research to investigate the impact of board gender diversity and board compensation on firm financial performance in the Jordanian market. This manuscript is expected to be used as a reference by the regulators and policymakers – both in Jordan and other countries with a similar institutional, cultural setting – to provide a deep understanding of the impact of board gender diversity and board compensation on the firm performance.

Gender diversity and financial performance of Islamic banks

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Huthayfa Nabeel Jabari ◽  
Rusnah Muhamad
Keyword(s):  
Financial Performance ◽  
Least Squares ◽  
Gender Diversity ◽  
Estimation Method ◽  
Supervisory Board ◽  
Ordinary Least Squares ◽  
Least Squares Estimation ◽  
Islamic Banks ◽  
Content Type ◽  
Gender Diverse

Purpose The purpose of this paper is to examine the influence of gender diversity among the board of directors (BOD) and Shariah supervisory board (SSB) members on the financial performance of Islamic banks in Indonesia and Malaysia. Design/methodology/approach Data for a sample of 19 Islamic banks for the period 2010–2018 were collected to test the research hypotheses using pooled ordinary least squares estimation method. Generalized least squares estimation method was used to confirm that the results are robust. This study lagged the explanatory variables by one period to control for potential endogeneity. Findings The findings suggest that Islamic banks with more gender-diverse BOD and SSB are expected to have better financial performance. In addition, this paper finds that an increase in Islamic banks’ size may undermine the positive impact of gender diversity among SSB members on Islamic banks’ financial performance. Research limitations/implications This study was conducted only on Islamic banks in Indonesia and Malaysia owing to data constraints; thus, the results may not be generalizable to Islamic banks in other countries. Practical implications Improving financial performance is crucial for banks, especially for Islamic banks, to sustain their fast-growing share globally. Therefore, the findings of this study are expected to provide insight and understanding in the selection and appointment of BOD and SSB members at Islamic banks. Social implications By having women represented in the BOD and SSB, Islamic banks will benefit equally from valuable abilities across demographic groups in the society. Furthermore, if the members of the BOD and SSB are properly selected, Islamic banks with more gender-diverse boards can effectively contribute to enhancing social welfare of various segments in the society. Originality/value This is the first study, as far as is known to the authors, that provides empirical evidence on the influence of gender diversity among BOD and SSB members on the financial performance of Islamic banks. This paper is expected to be used as a reference by the shareholders and customers of Islamic banks in ensuring that the BOD and SSB have the best optimal composition that maximizes their profits.

Female directors and agency costs: evidence from Chinese listed firms

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qurat Ul Ain ◽  
Xianghui Yuan ◽  
Hafiz Mustansar Javaid ◽  
Muhammad Usman ◽  
Muhammad Haris
Keyword(s):  
Agency Costs ◽  
Conflicts Of Interest ◽  
Critical Mass ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Listed Firms ◽  
Female Directors ◽  
Wide Range ◽  
Board Gender Diversity

PurposeThe purpose of this research is to examine whether board gender diversity reduces the agency costs of firms in the context of Chinese listed firms.Design/methodology/approachThis paper uses a large sample of 23,340 firm-year observations of Chinese listed companies during 2004–2017. The authors use ordinary least squares regressions as the primary methodology with a wide range of methods to control for endogeneity and to check robustness, including the fixed-effect method, instrumental variable approach, lagged gender diversity measures, propensity score matching, Blau index, Shannon index and industry-adjusted measures of agency costs.FindingsThe evidence reveals that the participation of female directors in corporate board reduces agency costs, which correlates with conflicts of interest. Moreover, gender-diverse boards are more effective in state-owned enterprises (SOEs), in which agency issues are more severe. Female directors also provide better monitoring roles in more-developed areas. Finally, corporate boards that have a critical mass of female directors have a greater tendency to reduce agency costs as compared to their token participation. Overall, all findings support the validity of agency theory.Practical implicationsThis study shows the economic benefit of female directors in the boardroom by reducing agency costs and by improving firms' governance structure. Regarding the government, which is gradually introducing board gender diversity policies, this study provides valuable pragmatic information for Chinese regulators on this issue.Originality/valueThis study extends the literature by providing evidence that gender diversity in boardroom matters for shareholders' wealth maximization. It provides novel evidence that a critical mass of female directors is more effective in reducing agency costs compared to a single female on the board, and that the effect of gender diversity varies in relation to ownership structure and region.

Political connections, the cost of debt and board attributes: evidence from Malaysia

2019 ◽  
Vol 45 (7) ◽  
pp. 842-855 ◽  
Author(s):  
Chwee Ming Tee
Keyword(s):  
Audit Committee ◽  
Ethnically Diverse ◽  
Ordinary Least Squares ◽  
Moderating Effect ◽  
Cost Of Debt ◽  
Board Diversity ◽  
Content Type ◽  
Crony Capitalism ◽  
The Cost ◽  
The Impact

Purpose The purpose of this paper is to examine whether the relationship between politically connected firms (PCFs) and the cost of debt is moderated by board attributes such as audit committee independence, ethnic board diversity, gender board diversity and family controlling ownership. Design/methodology/approach This study employs ordinary least squares model to examine the moderating effect of audit committee independence on the association between PCFs and the cost of debt; moderating effect of ethnic board diversity on the association between PCFs and the cost of debt; moderating effect of gender board diversity on the association between PCFs and the cost of debt; and moderating effect of family-controlled boards on the association between PCFs and the cost of debt. Findings The results show that PCFs are associated with lower cost of debt, consistent with crony capitalism theory. Furthermore, board attributes are shown to have significant moderating effect on the association between PCFs and the cost of debt. Specifically, the cost of debt in PCFs can be further reduced, provided the boards have higher audit committee independence, are ethnically diverse, have higher proportion of female directors in the board and audit committee and are controlled by family shareholders. Originality/value This study reveals evidence on the impact of board attributes on the cost of debt in PCFs. All findings suggest that concerns on PCFs’ severe agency problems can be alleviated through effective monitoring. The significant board attributes that facilitate effective monitoring are audit committee independence, ethnic board diversity, gender board diversity and family ownership.

The Economic and Organizational Basis of Early United States Strikes, 1900–1948

ILR Review ◽  
1982 ◽  
Vol 35 (4) ◽  
pp. 491-503 ◽  
Author(s):  
Jack W. Skeels
Keyword(s):  
United States ◽  
Twentieth Century ◽  
Least Squares ◽  
The United States ◽  
Ordinary Least Squares ◽  
Economic Factors ◽  
Least Squares Regression ◽  
Two Stage ◽  
Strike Activity ◽  
Political Variables

This paper examines the question of whether economic factors played an important role in determining strike activity in the United States in the first half of the twentieth century. A review of recent research shows one author, David Snyder, concluding that economic factors mattered little during that period and that union organization and political variables explained much more; and another, P. K. Edwards, concluding the opposite. A retest of these authors' analyses, employing ordinary least squares regression and a variety of measures, suggests that Snyder's position is more sound. This author argues, however, that Edwards was correct in claiming that economic factors are major determinants of the extent of unionism as well as of strike activity, and thus one needs to apply a two-stage least squares test of the Snyder hypothesis. When that is done, the results show that economic variables are highly significant determinants of strike activity throughout the pre-1949 period, but for the subperiod 1921–29 noneconomic factors also play a role.

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