The purpose of this paper is to examine the impact of board gender diversity on bond terms and bondholders’ returns.
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.
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.
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.
