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Does board gender diversity affect corporate cash holdings?

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  • Muhammad Atif
  • Benjamin Liu
  • Allen Huang

Abstract

This paper examines whether board gender diversity affects corporate cash holdings using S&P 1500 index firms in the US for the period 2006–2015. We document a significantly negative relationship between board gender diversity and cash holdings. We also find a strong negative effect of female independent directors consistent with monitoring function. Moreover, in accordance with the critical mass theory, we find a negative effect of female directors’ presence and voice on cash holdings. Our findings are robust to alternative econometric specifications, alternative measures of cash holdings and corporate governance, difference‐in‐differences, propensity score matching, and two‐stage least squares. This study offers useful insights into the current global debate on gender diversity and its implications for firms.

Suggested Citation

  • Muhammad Atif & Benjamin Liu & Allen Huang, 2019. "Does board gender diversity affect corporate cash holdings?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 46(7-8), pages 1003-1029, July.
    • Handle: RePEc:bla:jbfnac:v:46:y:2019:i:7-8:p:1003-1029
    DOI: 10.1111/jbfa.12397
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    Cited by:

    1. Mostafa Monzur Hasan & Ahsan Habib & Ruoyun Zhao, 2022. "Corporate reputation risk and cash holdings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 667-707, March.
    2. Wang, Huaxing & Li, Tianzi & Zhu, Junfan & Jian, Youting & Wang, Zeyu & Wang, Zengwen, 2023. "China's new environmental protection law: Implications for mineral resource policy, environmental precaution and green finance," Resources Policy, Elsevier, vol. 85(PB).
    3. Liu, Benjamin & Johl, Shireenjit & Lasantha, Ruwan, 2023. "ESG scores and cash holdings: The role of disciplinary trading," Finance Research Letters, Elsevier, vol. 55(PA).
    4. Gull, Ammar Ali & Atif, Muhammad & Hussain, Nazim, 2023. "Board gender composition and waste management: Cross-country evidence," The British Accounting Review, Elsevier, vol. 55(1).
    5. Muhammad Atif & Md. Samsul Alam & Mohammed Hossain, 2020. "Firm sustainable investment: Are female directors greener?," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3449-3469, December.
    6. Ammad Ahmed & Muhammad Atif, 2021. "Board gender composition and debt financing," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 3075-3092, April.
    7. Yang Zhang & Xinxin Zhang, 2022. "The Threshold Effect of Executive Compensation on Corporate Environmental Responsibility: Based on the Moderating Effect of Industry Competition," Sustainability, MDPI, vol. 14(14), pages 1-24, July.
    8. Shang, Duo & Yuan, Dongliang & Li, Dehui & Lin, Qi, 2023. "Independent directors’ geographic distance, high-speed railway, and corporate cash holdings," Economic Modelling, Elsevier, vol. 121(C).
    9. Yang, Hanping & Xue, Kunkun, 2023. "Board diversity and the marginal value of corporate cash holdings," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    10. 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.
    11. Saleh F. A. Khatib & Dewi Fariha Abdullah & Ernie Hendrawaty & Ahmed A. Elamer, 2022. "A bibliometric analysis of cash holdings literature: current status, development, and agenda for future research," Management Review Quarterly, Springer, vol. 72(3), pages 707-744, September.
    12. Sivathaasan Nadarajah & Muhammad Atif & Ammar Ali Gull, 2022. "State-Level Culture and Workplace Diversity Policies: Evidence from US Firms," Journal of Business Ethics, Springer, vol. 177(2), pages 443-462, May.
    13. Chen, Naiwei & Yu, Min-Teh, 2021. "National Governance and Corporate Liquidity in Organization of Islamic Cooperation Countries: Evidence based on a Sharia-compliant Liquidity Measure," Emerging Markets Review, Elsevier, vol. 47(C).
    14. Atif, Muhammad & Hossain, Mohammed & Alam, Md Samsul & Goergen, Marc, 2021. "Does board gender diversity affect renewable energy consumption?," Journal of Corporate Finance, Elsevier, vol. 66(C).
    15. Jarkko Peltomäki & Jukka Sihvonen & Steve Swidler & Sami Vähämaa, 2021. "Age, gender, and risk‐taking: Evidence from the S&P 1500 executives and market‐based measures of firm risk," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(9-10), pages 1988-2014, October.
    16. Ding Ning & Irfan-Ullah & Muhammad Ansar Majeed & Aurang Zeb, 2022. "Board diversity and financial statement comparability: evidence from China," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 743-801, December.
    17. Muhammad Atif & Benjamin Liu & Sivathaasan Nadarajah, 2022. "The effect of corporate environmental, social and governance disclosure on cash holdings: Life‐cycle perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2193-2212, July.
    18. Mohammad Hendijani Zadeh & Michel Magnan & Denis Cormier & Ahmad Hammami, 2021. "Does corporate social responsibility transparency mitigate corporate cash holdings?," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 19(1), pages 63-87, December.
    19. Shehub Bin Hasan & Md Samsul Alam & Sudharshan Reddy Paramati & Md Shahidul Islam, 2022. "Does firm-level political risk affect cash holdings?," Review of Quantitative Finance and Accounting, Springer, vol. 59(1), pages 311-337, July.
    20. Li, Mengzhe & Lan, Fei, 2022. "Former CEO directors and cash holdings," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 320-334.
    21. Alam, Md Samsul & Safiullah, Md & Islam, Md Shahidul, 2022. "Cash-rich firms and carbon emissions," International Review of Financial Analysis, Elsevier, vol. 81(C).
    22. Mohit Pathak & Arti Chandani, 2023. "Board composition, executive compensation, and financial performance: panel evidence from India," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(4), pages 359-373, December.
    23. Tosun, Onur Kemel & El Kalak, Izidin & Hudson, Robert, 2022. "How female directors help firms to attain optimal cash holdings," International Review of Financial Analysis, Elsevier, vol. 80(C).

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