Gender, Board, and Working Capital

Abstract

This paper examines the effects of gender board diversity on working capital. The study uses a sample of S&P1500 firms, resulting in 9,157 firm-year observations from 2005 to 2019. Our findings show that greater gender diversity on corporate boards is associated with lower liquidity ratios, including lower non-cash ones. The results are robust to a battery of gender board diversity definitions and to a 2SLS analysis which employs the gender ratio in the county’s population in which the firm is headquartered as an instrumental variable. Based on additional tests of the effects of gender board diversity on managerial efficiency ratios, we conclude that the results are driven by superior monitoring associated with gender diversity on the board.