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Female directors on the board and cost of debt: evidence from Australia

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  • Rakesh Pandey
  • Pallab Kumar Biswas
  • Muhammad Jahangir Ali
  • Mansi Mansi

Abstract

We examine whether the presence of female board members has any impact on the cost of debt among Australian listed companies. We find that female presence on the board is negatively associated with the cost of debt. Most importantly, our findings support the argument of critical mass theory that a certain threshold of gender balance is required for enhancing board effectiveness. Our results are valid irrespective of alternate model specifications and endogeneity issues. Overall, the results provide support to the ASX Corporate Governance Principles and Recommendation for the appointment of female directors on corporate boards.

Suggested Citation

  • Rakesh Pandey & Pallab Kumar Biswas & Muhammad Jahangir Ali & Mansi Mansi, 2020. "Female directors on the board and cost of debt: evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 4031-4060, December.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:4:p:4031-4060
    DOI: 10.1111/acfi.12521
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