Exploring the Effect of Boardroom Gender Diversity on Financial Constraints of Firms: An International Evidence

In this paper, we investigate the intricate relationship between boardroom gender diversity and financial constraints. Analysing a large sample of firms from 49 countries, our findings show a significant negative effect of gender diversity on the financial constraints of firms. We also find that both firm age and firm size have strong negative effects on financial constraints. However, only the former appears to have complementary moderation effect between gender diversity and financial constraints nexus. Furthermore, cross-cultural and country-level institutional quality characteristics, such as the rule of law and regulatory quality, have an important bearing on the relationship between gender diversity and financial constraints. For high-income countries, gender diversity and financial constraints are negatively related, whereas this is not the case for low- and middle-income countries. Our baseline findings are also robust with an alternative measure of financial constraints and subsample analyses. Overall, our research offers valuable insights for overcoming financial constraints by embracing diversity in corporate boards.