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The effects of board gender diversity on a firm's risk strategies
Author(s) -
Chen Linda H.,
Gramlich Jeffrey,
Houser Kimberly A.
Publication year - 2019
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12283
Subject(s) - reputation , shareholder , business , diversity (politics) , gender diversity , financial risk , accounting , actuarial science , corporate governance , finance , political science , law
We study whether board gender diversity ( BGD ) affects corporate risk strategies. Specifically, we investigate the association between BGD and firms’ reputation risk and financial risk. Using S&P data from 1997 to 2013, we find that BGD is negatively associated with tax avoidance, suggesting firms with gender‐diverse boards are more cautious about potential reputation risks associated with aggressive tax strategies. However, we find that BGD is positively associated with firms’ financial risk. The combined findings illustrate that BGD aligns a firm's risk exposure closer to risk‐neutral shareholders’ preferences by reducing reputation risk exposure while enabling necessary financial risk exposure.