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Board Gender Diversity and Risk Management in Corporate Financing: A Study on Debt Structure and Financial Decision-Making

Author

Listed:
  • Davood Askarany

    (Department of Accounting and Finance, Business School, University of Auckland, Auckland 1010, New Zealand)

  • Soleil Jafari

    (Department of Accounting, Gonbad-e-Kavoos Branch, Islamic Azad University, Gonbad-e-Kavoos 4971799151, Iran)

  • Azam Pouryousof

    (Faculty of Management, Economics & Accounting, Payame Noor University, Tehran 19395-4697, Iran)

  • Sona Habibi

    (Department of Accounting, Gonbad-e-Kavoos Branch, Islamic Azad University, Gonbad-e-Kavoos 4971799151, Iran)

  • Hassan Yazdifar

    (College of Business, Law and Social Sciences, University of Derby, Derby DE22 1GB, UK
    Gulf Finance Centre, Gulf University for Science and Technology, Hawally 32093, Kuwait)

Abstract

Purpose: This study examines the role of board gender diversity in shaping corporate financial decisions, particularly in terms of debt structure and risk management. Focusing on the Tehran Stock Exchange, it explores how female representation on boards influences long-term and short-term leverage decisions, focusing on the moderating effect of board compensation. Design/Methodology: Utilising a quantitative ex post facto design, the study analyses data from 114 companies listed on the Tehran Stock Exchange between 2017 and 2021. Multivariate regression techniques, including year- and industry-fixed effects, are employed to investigate the relationship between board gender diversity, debt structure, and risk-taking behaviour. Findings: The results reveal a significant negative relationship between female board representation and long-term debt, suggesting that companies with more female directors tend to adopt more conservative debt structures, thereby reducing risk. Additionally, the findings demonstrate that board compensation moderates this relationship by curbing managerial risk-taking, further improving financial decision-making. Originality/Value: This research provides novel insights into the intersection of board gender diversity and risk management in financial decision-making, particularly in the context of a developing economy like Iran. It also offers practical implications for firms seeking to optimise their debt structures while maintaining sound risk management practices.

Suggested Citation

  • Davood Askarany & Soleil Jafari & Azam Pouryousof & Sona Habibi & Hassan Yazdifar, 2025. "Board Gender Diversity and Risk Management in Corporate Financing: A Study on Debt Structure and Financial Decision-Making," Risks, MDPI, vol. 13(1), pages 1-22, January.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:1:p:11-:d:1565954
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    References listed on IDEAS

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    1. Mona Said & Rami Galal & Mina Sami, 2022. "Gender diversity, productivity, and wages in private Egyptian firms," Applied Economics, Taylor & Francis Journals, vol. 54(38), pages 4433-4448, August.
    2. Sudip Datta & Mai Iskandar‐Datta & Kartik Raman, 2005. "Managerial Stock Ownership and the Maturity Structure of Corporate Debt," Journal of Finance, American Finance Association, vol. 60(5), pages 2333-2350, October.
    3. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    4. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    5. Yuan George Shan, 2019. "Managerial ownership, board independence and firm performance," Accounting Research Journal, Emerald Group Publishing Limited, vol. 32(2), pages 203-220, July.
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