Board Gender Diversity and Corporate Cash Holdings: International Evidence

We examine the impact of worldwide board gender diversity reforms on corporate cash holdings. While prior studies largely demonstrate an improved corporate governance after the reforms, evidence on what impacts made on corporate practices is rather sparse. We argue that cash holdings as an important corporate policy does benefit from such improvement. Using a comprehensive sample of firms in 44 countries over the period of 2000-2018 and employing a difference-in-differences (DiD) research design, we find that board gender diversity reforms are associated with a significant reduction in cash holdings of about 5.2%. We also document that the reduced cash holdings contribute to higher firm value. In cross-sectional analysis, we find that the negative effect of board gender diversity reforms on cash holdings is amplified for financially constrained firms and for firms in countries with weaker legal institutions, which demonstrate the reform effectiveness in environments with higher agency conflicts. Our study provides support for the value-creation proposition of board gender diversity reforms through the lens of corporate cash policy.