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Female directors on the board and investment efficiency: evidence from Korea

Author

Listed:
  • Young Zik Shin

    (Sungkyunkwan University)

  • Jeung-Yoon Chang

    (Sungkyunkwan University)

  • Kyeongmin Jeon

    (Sungkyunkwan University)

  • Hyunpyo Kim

    (Shippensburg University of Pennsylvania)

Abstract

We investigate whether female board representation affects investment efficiency at Korean publicly traded companies from 2006 to 2014. We find a positive association between female directorship and investment efficiency. For a subsample of firms that are classified into over- and under-investment groups, we find that the subsample of firms with female directors is less likely to over-invest compared to the group without female directors. This implies that female directors’ risk-aversion, conservatism, and prudence affect investment efficiency by reducing over-investment rather than reducing under-investment. Other robustness tests corroborate our conclusion that female directors help to improve investment efficiency.

Suggested Citation

  • Young Zik Shin & Jeung-Yoon Chang & Kyeongmin Jeon & Hyunpyo Kim, 2020. "Female directors on the board and investment efficiency: evidence from Korea," Asian Business & Management, Palgrave Macmillan, vol. 19(4), pages 438-479, September.
    • Handle: RePEc:pal:abaman:v:19:y:2020:i:4:d:10.1057_s41291-019-00066-2
    DOI: 10.1057/s41291-019-00066-2
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