IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v86y2025ipfs1544612325019269.html

Female executives and the cost of equity capital

Author

Listed:
  • Xie, Heng
  • Wang, Yiting
  • Yang, Xiaoqing
  • Huang, Shasha

Abstract

Using panel data from A-share listed companies from 2008 to 2023, this paper examines the relationship between female executives and the cost of equity capital. Results show that female executives significantly reduce the cost of equity capital, and a higher share of female executives leads to a greater reduction. This effect is stronger in firms with weaker internal control. Further analysis indicates that operational risk and information quality partially mediate these relationships—female executives lower the cost of equity by reducing risk and improving accounting information quality.

Suggested Citation

  • Xie, Heng & Wang, Yiting & Yang, Xiaoqing & Huang, Shasha, 2025. "Female executives and the cost of equity capital," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325019269
    DOI: 10.1016/j.frl.2025.108672
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325019269
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.108672?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Yu, Zhi & Wang, Qun & Zhao, Xiangfang & Zhao, Qiong, 2025. "Do female executives play a role in corporate green business philosophy?," International Review of Financial Analysis, Elsevier, vol. 99(C).
    2. Bill Francis & Iftekhar Hasan & Jong Chool Park & Qiang Wu, 2015. "Gender Differences in Financial Reporting Decision Making: Evidence from Accounting Conservatism," Contemporary Accounting Research, John Wiley & Sons, vol. 32(3), pages 1285-1318, September.
    3. Balakrishnan, Karthik & Vashishtha, Rahul & Verrecchia, Robert E., 2019. "Foreign competition for shares and the pricing of information asymmetry: Evidence from equity market liberalization," Journal of Accounting and Economics, Elsevier, vol. 67(1), pages 80-97.
    4. Allison, Lee & Liu, Yu & Murtinu, Samuele & Wei, Zuobao, 2023. "Gender and firm performance around the world: The roles of finance, technology and labor," Journal of Business Research, Elsevier, vol. 154(C).
    5. 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.
    6. Kam C. Chan & Yining Chen & Baohua Liu, 2021. "The Linear and Non-Linear Effects of Internal Control and Its Five Components on Corporate Innovation: Evidence from Chinese Firms Using the COSO Framework," European Accounting Review, Taylor & Francis Journals, vol. 30(4), pages 733-765, August.
    7. Zhao, Tianyu & Yan, Na & Ji, Liya, 2023. "Digital transformation, life cycle and internal control effectiveness: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PA).
    8. Dreber, Anna & Johannesson, Magnus, 2008. "Gender differences in deception," Economics Letters, Elsevier, vol. 99(1), pages 197-199, April.
    9. Sun, Yahui & Huang, Yating & Feng, Qindi, 2024. "Internal control and stock liquidity," Finance Research Letters, Elsevier, vol. 66(C).
    10. Li, Minghui & Song, Yiran, 2025. "Bank executive incentives and liquidity creation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 99(C).
    11. Tian, Ting, 2024. "Credit default risk, internal control and stock returns," Finance Research Letters, Elsevier, vol. 67(PB).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ming-Yuan Chen & Yi-Ting Wang, 2025. "Female directors and employment stability: A longitudinal analysis of the roles of ultimate owners and managers’ incentive compensation," Australian Journal of Management, Australian School of Business, vol. 50(1), pages 80-103, February.
    2. Wolfgang Breuer & Andreas Knetsch & Astrid Juliane Salzmann, 2023. "Trust rhetoric and CEO gender," Review of Financial Economics, John Wiley & Sons, vol. 41(3), pages 322-344, July.
    3. Jiang Cheng & Hung-Gay Fung & Tzu-Ting Lin & Min-Ming Wen, 2024. "CEO optimism and the use of credit default swaps: evidence from the US life insurance industry," Review of Quantitative Finance and Accounting, Springer, vol. 63(1), pages 169-194, July.
    4. Li, Chengming & Wang, Hanyang & Zhang, Changyun, 2026. "Digital transformation and corporate mergers and acquisitions: Evidence and mechanism in China," Pacific-Basin Finance Journal, Elsevier, vol. 95(C).
    5. Tu Thanh Hoai & Nguyen Phong Nguyen, 2022. "Internal Control Systems and Performance of Emerging Market Firms: The Moderating Roles of Leadership Consistency and Quality," SAGE Open, , vol. 12(3), pages 21582440221, September.
    6. Janßen, Niklas, 2025. "Integrating sustainability in risk management and internal control systems: An empirical assessment of ESG reporting of German DAX40 firms," Junior Management Science (JUMS), Junior Management Science e. V., vol. 10(4), pages 858-875.
    7. Buser, Thomas & Sangi, Sahar, 2025. "Willingness to Compete in Dirty Competitions," IZA Discussion Papers 17676, IZA Network @ LISER.
    8. Xing, Lu & Gonzalez, Angelica & Sila, Vathunyoo, 2021. "Does cooperation among women enhance or impede firm performance?," The British Accounting Review, Elsevier, vol. 53(4).
    9. Barabino, Benedetto & Salis, Sara & Useli, Bruno, 2015. "What are the determinants in making people free riders in proof-of-payment transit systems? Evidence from Italy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 80(C), pages 184-196.
    10. Kerim Peren Arin & Juan A. Lacomba & Francisco Lagos & Deni Mazrekaj & Marcel Thum, 2021. "Misperceptions and Fake News during the Covid-19 Pandemic," CESifo Working Paper Series 9066, CESifo.
    11. Jing Li & Jiang Cheng, 2023. "Are female CEOs associated with lower insolvency risk? Evidence from the US property‐casualty insurance industry," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(4), pages 941-973, December.
    12. Sah, Nilesh B. & Adhikari, Hari P. & Krolikowski, Marcin W. & Malm, James & Nguyen, Thanh T., 2022. "CEO gender and risk aversion: Further evidence using the composition of firm’s cash," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).
    13. Isabelle Brocas & Juan D. Carrillo, 2022. "The development of randomization and deceptive behavior in mixed strategy games," Quantitative Economics, Econometric Society, vol. 13(2), pages 825-862, May.
    14. Bucciol, Alessandro & Landini, Fabio & Piovesan, Marco, 2013. "Unethical behavior in the field: Demographic characteristics and beliefs of the cheater," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 248-257.
    15. Alaa Mansour Zalata & Collins Ntim & Ahmed Aboud & Ernest Gyapong, 2019. "Female CEOs and Core Earnings Quality: New Evidence on the Ethics Versus Risk-Aversion Puzzle," Journal of Business Ethics, Springer, vol. 160(2), pages 515-534, December.
    16. repec:cep:stitep:/2012/563 is not listed on IDEAS
    17. Fang, Ming & Francis, Bill & Hasan, Iftekhar & Wu, Qiang, 2022. "External social networks and earnings management," The British Accounting Review, Elsevier, vol. 54(2).
    18. Yunsen Wang & Tiffany Chiu & Alexander Kogan, 2025. "The effects of COVID-19 pandemic and auditor-client geographic proximity on auditors' going concern opinions," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 22(2), pages 341-361, June.
    19. Hongying Yin & Xiaoyun Gong & Xiaofeng Quan & Annie Y. S. Li, 2024. "Local gambling preferences and corporate tax avoidance: Evidence from China," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3413-3443, July.
    20. Yang Zhang, 2025. "Does ESG Performance Affect Enterprise Innovation Performance? A Study on Governance and Resource Effects," SAGE Open, , vol. 15(3), pages 21582440251, July.
    21. Duc Huynh, Toan Luu, 2020. "Replication: Cheating, loss aversion, and moral attitudes in Vietnam," Journal of Economic Psychology, Elsevier, vol. 78(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325019269. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.