Women on boards and the cost of debt: The role of family ties

We examine the female director-cost of debt relationship in a continental European environment where –as in most countries– the conflict of interest between dominant owners and minority shareholders is prevalent. Using a sample of non-financial Spanish listed companies for 2007–2023, our results show that female directors have an impact on a higher cost of debt until they reach a critical mass, after which their effect on the price of financing is negative. Moreover, the presence of family ties among female directors influences their effect on the cost of debt, such that while a small number of family female directors reduces conflicts with creditors, the presence of a critical mass of female directors with family ties increases the cost of financing. Our findings indicate that dominant owners may appoint female directors for different purposes, thereby affecting the level of conflict with creditors.