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Board Gender Diversity and Corporate Cash Holdings

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  • Aitzaz Ahsan Alias Sarang
  • Nicolas Aubert
  • Xavier Hollandts

Abstract

This study investigates the relationship between board gender diversity and corporate cash holdings (i.e., liquidity risk) and excess cash holdings (i.e., agency risk). Using a sample of French firms listed on the SBF 120 index over the period 1998-2015, we find a significant positive relationship between board gender diversity and two measures of corporate cash holdings ? corporate cash ratio and industry-adjusted cash ratio ? and a negative relationship between board gender diversity and excess cash holdings. These results support the notion that feminized boards are associated with lower liquidity and agency risk, implying that women directors are more rigorous at monitoring, preventing managers from stockpiling cash beyond the optimal level. In relation to the Copé-Zimmermann gender quota law, the study provides significant intermediate results that are robust to alternate specifications and tests.

Suggested Citation

  • Aitzaz Ahsan Alias Sarang & Nicolas Aubert & Xavier Hollandts, 2021. "Board Gender Diversity and Corporate Cash Holdings," Finance, Presses universitaires de Grenoble, vol. 42(1), pages 7-49.
    • Handle: RePEc:cai:finpug:fina_421_0007
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    1. Aitzaz Ahsan Alias Sarang & Nicolas Aubert & Xavier Hollandts, 2024. "Board gender diversity and the cost of equity: What difference does gender quota legislation make?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 2193-2213, April.
    2. Yang, Hanping & Xue, Kunkun, 2023. "Board diversity and the marginal value of corporate cash holdings," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    3. Asad Ali Rind & Aitzaz Ahsan Alias Sarang & Ameet Kumar & Muhammad Shahbaz, 2023. "Does financial fraud affect implied cost of equity?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4139-4155, October.

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