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Gender Diversity in the Boardroom and Risk Management: A Case of R&D Investment

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Abstract

Increasing gender diversity in the boardroom has been promoted as a way to enhance corporate governance and risk management. This study empirically examines whether boards with more female directors play a role in reducing R&D risk. We first show that female directors help to reduce the positive relationship between R&D investment and future performance volatility. We then report that firms with more gender-diverse boards exhibit a lower adverse effect of R&D on the cost of debt. These results are robust to endogeneity analysis, alternative measures of gender diversity and risky investment, and other sensitivity tests. Overall, our results suggest that female directors improve board effectiveness in risk management with respect to R&D investment. 

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[Chen, Shimin ; Ni, Xu] China Europe Int Business Sch, Shanghai, Peoples R China

[Tong, Jamie Y.] niv Western Australia, Perth, WA, Australia


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Source

Journal of Business Ethics

ISSN:0167-4544

Year:2015

Issue:3

Volume:136

Page:599-621

ESI Discipline:ECONOMICS & BUSINESS;

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