This study examines how board gender diversity relates to firms' financing choices in the setting of Accounting Standards Update No. 2016–02 (ASU 2016–02).
ASU 2016–02 mandates the capitalization of operating leases, introducing an exogenous shock to reported leverage. Exploiting this regulatory change, we apply a difference-in-differences approach to assess how firms with varying levels of female board representation differ in reported leverage and financing choices before and after the implementation of the standard.
Before ASU 2016–02, firms with higher female board representation exhibit lower reported leverage. However, this relationship reverses post-implementation, with gender-diverse boards associated with higher leverage. This shift is driven by the capitalization of operating leases and an increased reliance on long-term non-lease debt. Moreover, firms with more female directors reduce their operating lease usage, shift from long-term to short-term lease contracts, and increase capital expenditures following the rule change.
This study contributes to the literature on gender and corporate finance by showing that the relation between board gender diversity and financing outcomes depends on the reporting environment. Rather than supporting a simple trait-based view that female directors are uniformly more risk-averse, the findings are more consistent with governance, monitoring, and financing adjustment following regulatory change.
