Gender Diversity in the Boardroom and Corporate Cash Holdings: The Moderating Effect of Investor Protection
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
2.1. Board Gender Diversity and Corporate Cash Holdings
2.2. Investor Protection, Board Gender Diversity and Corporate Cash Holdings
3. Research Design
3.1. Measurement for Variables
3.2. Regression Model
3.3. Sample Selection
4. Discussion of Results
4.1. Descriptive Statistics
4.2. Main Results
4.3. Endogeneity Issue
+ β7BDSIZEit + β8INDEPit + β9OUTDIRit + Fixed_Effects + eit
4.4. Robustness Tests
4.5. Discussion of the Results
5. Conclusions
Author Contributions
Funding
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Variables | Definition |
---|---|
(1) CCH1 | The proportion of cash and equivalents to total assets |
(2) CCH2 | The total cash and equivalents divided by the total assets minus cash and equivalents |
(3) DIVBOD | The proportion of female directors over the total number of directors |
(4) BLAU | A measurement corresponds to the proportion of group female and male using the formula from the Blau (1977) index of heterogeneity |
(5) FEMALE | A dummy variable that takes the value of 1 if the board has at least one female director, otherwise 0. |
(6) DINVPRO | A dummy variable that takes the value of 1 if the investor protection index by World Economic Forum is greater than the median, otherwise 0. |
(7) DASDI | A dummy variable that takes the value of 1 if the anti-self-dealing index (ASDI) by Djankov et al. (2008) is greater than the median, otherwise 0. |
(8) SIZE | The natural logarithm of total assets |
(9) LEV | The ratio of total debt per total assets |
(10) GROWTH | The change of net sales over last year’s sales |
(11) LOSS | A dummy variable that takes the value of 1 if net income is negative, otherwise 0. |
(12) MTB | The ratio of market-to-book value |
(13) QUICK | The ratio of current assets minus the inventory divided by the total current liabilities |
(14) RETEQ | The ratio of retained earnings to total equity |
(15) LIT | A dummy variable for industries with high litigation risk, classified as 1 if the SIC codes were between 2833–2836, 3570–3577, 3600–3674, 5200–5961, and 7370–7370, otherwise 0 (Ashbaugh and LaFond 2003) |
(16) AGE | The number of years since IPO |
(17) FEMLAB | The women in labor force ratio to men |
(18) GOVDEBT | The ratio of government debts over gross domestic product |
(19) ROA | The net income over the total assets |
(20) CURR | The ratio of total current assets over total current liabilities |
(21) BDSIZE | The number of directors on the board |
(22) INDEP | The proportion of independent directors over the total number of directors |
(23) OUTDIR | The proportion of non-executive directors over the total number of directors |
1 | The correlations are not tabulated in the paper in the interest of brevity. They are available on request from the authors. |
2 | This methodology has been used in earlier studies (e.g., Jaggi and Low 2011; and Hope et al. 2009). |
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Panel A: Firm Level (n = 20,750) | |||||||
Variable/Stat | Mean | Std. Dev. | p25 | Median | p75 | Max | Min |
CCH1 | 0.102 | 0.116 | 0.026 | 0.066 | 0.137 | 0.999 | −0.024 |
CCH2 | 0.136 | 0.203 | 0.026 | 0.071 | 0.159 | 1.370 | 0.000 |
DIVBOD | 0.127 | 0.119 | 0.000 | 0.111 | 0.200 | 0.750 | 0.000 |
BLAU | 0.193 | 0.160 | 0.000 | 0.198 | 0.32 | 0.494 | 0.000 |
FEMALE | 0.664 | 0.472 | 0.000 | 1.000 | 1.000 | 1.000 | 0.000 |
DIVEXEC | 0.113 | 0.129 | 0.000 | 0.091 | 0.200 | 1.000 | 0.000 |
SIZE | 22.114 | 1.597 | 21.127 | 22.15 | 23.143 | 26.913 | 18.024 |
LEV | 0.246 | 0.185 | 0.100 | 0.230 | 0.359 | 0.825 | 0.000 |
GROWTH | 0.090 | 0.332 | −0.048 | 0.046 | 0.154 | 2.168 | −0.660 |
LOSS | 0.142 | 0.349 | 0.000 | 0.000 | 0.000 | 1.000 | 0.000 |
MTB | 3.114 | 4.150 | 1.111 | 1.952 | 3.626 | 25.381 | −6.249 |
QUICK | 1.740 | 1.998 | 0.800 | 1.181 | 1.862 | 14.936 | 0.141 |
RETEQ | 0.403 | 1.434 | 0.246 | 0.618 | 0.876 | 4.502 | −8.312 |
LIT | 0.202 | 0.401 | 0.000 | 0.000 | 0.000 | 1.000 | 0.000 |
AGE | 38.597 | 30.219 | 15.000 | 28.000 | 59.000 | 124.000 | 1.000 |
ROA | 0.063 | 0.115 | 0.025 | 0.062 | 0.112 | 0.383 | −0.480 |
CURR | 2.151 | 2.075 | 1.101 | 1.577 | 2.406 | 15.298 | 0.189 |
BDSIZE | 9.783 | 3.064 | 8.000 | 9.000 | 12.000 | 21.000 | 4.000 |
INDEP | 0.574 | 0.270 | 0.364 | 0.625 | 0.818 | 0.941 | 0.000 |
OUTDIR | 0.699 | 0.245 | 0.615 | 0.778 | 0.875 | 1.000 | 0.000 |
Panel B: Country Level | |||||||
Country | Obs | INVPRO | DINVPRO | DASDI | FEMLAB | GOVDEBT | |
Australia | 2149 | 5.725 | 0.000 | 1.000 | 0.852 | 0.311 | |
Austria | 34 | 5.071 | 0.000 | 0.000 | 0.864 | 0.763 | |
Belgium | 72 | 6.628 | 0.653 | 0.000 | 0.846 | 1.009 | |
Canada | 774 | 8.110 | 1.000 | 0.000 | 0.910 | 0.855 | |
China | 594 | 4.717 | 0.000 | 1.000 | 0.856 | 0.335 | |
Denmark | 104 | 6.605 | 0.433 | 0.000 | 0.925 | 0.445 | |
Finland | 32 | 5.687 | 0.000 | 0.000 | 0.954 | 0.548 | |
France | 368 | 5.795 | 0.117 | 0.000 | 0.882 | 0.883 | |
Germany | 42 | 5.440 | 0.000 | 0.000 | 0.870 | 0.741 | |
Greece | 69 | 4.712 | 0.000 | 0.000 | 0.743 | 1.565 | |
Hong Kong | 651 | 8.639 | 1.000 | 1.000 | 0.776 | 0.168 | |
India | 535 | 6.686 | 0.499 | 0.000 | 0.366 | 0.683 | |
Israel | 81 | 7.930 | 1.000 | 1.000 | 0.888 | 0.711 | |
Italy | 78 | 6.018 | 0.103 | 0.000 | 0.715 | 1.243 | |
Japan | 3383 | 6.674 | 0.608 | 0.000 | 0.754 | 2.322 | |
South Korea | 61 | 6.008 | 0.295 | 0.000 | 0.722 | 0.344 | |
Malaysia | 334 | 8.290 | 1.000 | 1.000 | 0.606 | 0.553 | |
Netherlands | 83 | 5.073 | 0.000 | 0.000 | 0.871 | 0.675 | |
Norway | 40 | 6.920 | 1.000 | 0.000 | 0.941 | 0.396 | |
Philippines | 149 | 4.105 | 0.000 | 0.000 | 0.640 | 0.410 | |
Poland | 156 | 6.090 | 0.000 | 0.000 | 0.817 | 0.536 | |
Portugal | 52 | 5.915 | 0.000 | 0.000 | 0.892 | 1.105 | |
Russia | 241 | 5.088 | 0.000 | 0.000 | 0.882 | 0.125 | |
Saudi Arabia | 53 | 6.294 | 0.472 | n/a | 0.255 | 0.090 | |
Singapore | 330 | 8.919 | 1.000 | 1.000 | 0.767 | 1.040 | |
South Africa | 737 | 7.518 | 1.000 | 1.000 | 0.778 | 0.443 | |
Sweden | 85 | 6.431 | 0.271 | 0.000 | 0.943 | 0.424 | |
Switzerland | 202 | 3.851 | 0.000 | 0.000 | 0.876 | 0.473 | |
Thailand | 184 | 7.150 | 0.842 | 1.000 | 0.822 | 0.441 | |
Turkey | 165 | 6.233 | 0.382 | 0.000 | 0.403 | 0.366 | |
United Arab Emirates | 38 | 5.729 | 0.211 | n/a | 0.477 | 0.199 | |
United Kingdom | 1159 | 7.910 | 1.000 | 1.000 | 0.858 | 0.828 | |
United States of America | 7715 | 7.312 | 0.571 | 1.000 | 0.856 | 1.007 | |
Total | 20,750 | 6.925 | 0.543 | 0.674 | 0.811 | 1.004 |
Sample | LOW | HIGH | POOLED | POOLED |
---|---|---|---|---|
Variable/Stats | (1) | (2) | (3) | (4) |
Intercept | 0.086 *** | 0.257 *** | 0.147 *** | 0.149 *** |
(3.841) | (14.809) | (10.756) | (10.853) | |
DIVBOD | −0.072 *** | −0.016 ** | −0.055 *** | −0.074 *** |
(−7.152) | (−2.100) | (−8.754) | (−8.635) | |
DDINVPRO | −0.003 * | −0.008 *** | ||
(−1.752) | (−3.503) | |||
DINVPRO*DIVBOD | 0.038 *** | |||
(3.273) | ||||
SIZE | −0.002 ** | −0.010 *** | −0.006 *** | −0.006 *** |
(−2.573) | (−14.487) | (−10.609) | (−10.546) | |
LEV | −0.090 *** | −0.073 *** | −0.079 *** | −0.079 *** |
(−12.660) | (−14.209) | (−18.508) | (−18.449) | |
GROWTH | 0.008 ** | 0.008 *** | 0.008 *** | 0.008 *** |
(2.504) | (2.863) | (3.612) | (3.529) | |
LOSS | 0.007 * | 0.009 *** | 0.009 *** | 0.009 *** |
(1.939) | (3.476) | (4.182) | (4.170) | |
MTB | 0.003 *** | 0.002 *** | 0.002 *** | 0.002 *** |
(9.014) | (8.346) | (13.089) | (13.000) | |
QUICK | 0.022 *** | 0.015 *** | 0.019 *** | 0.019 *** |
(34.960) | (27.001) | (46.455) | (46.510) | |
RETEQ | −0.004 *** | −0.000 | −0.003 *** | −0.003 *** |
(−5.564) | (−0.708) | (−5.481) | (−5.581) | |
LIT | 0.029 *** | 0.016 *** | 0.022 *** | 0.022 *** |
(5.843) | (4.900) | (7.533) | (7.501) | |
AGE | −0.000 ** | −0.000 | −0.000 | −0.000 |
(−2.334) | (−1.020) | (−0.736) | (−0.595) | |
FEMLAB | 0.011 | 0.019 ** | 0.031 *** | 0.031 *** |
(0.946) | (2.228) | (4.421) | (4.425) | |
Fixed Effects | Included | Included | Included | Included |
Adj.R2 | 0.33 | 0.31 | 0.31 | 0.31 |
N | 9482 | 11268 | 20750 | 20750 |
F-stat | 57.118 | 60.415 | 108.731 | 107.681 |
FIRST STAGE | SECOND STAGE | ||
---|---|---|---|
Dependent Variable = DIVBOD | Dependent Variable = CCH1 | ||
Variable/Stats | (1) | Variable/Stats | (2) |
Intercept | −0.211 *** | Intercept | 0.111 *** |
(−16.316) | (7.984) | ||
SIZE | 0.005 *** | PREDDIVBOD | −0.382 *** |
(8.703) | (−17.426) | ||
ROA | 0.040 *** | DINVPRO | −0.016 *** |
(6.147) | (−4.687) | ||
GROWTH | −0.015 *** | DINVPRO*PREDDIVBOD | 0.097 *** |
(−6.939) | (4.077) | ||
LEV | −0.002 | SIZE | −0.004 *** |
(−0.480) | (−6.883) | ||
CURR | −0.003 *** | LEV | −0.076 *** |
(−7.584) | (−17.683) | ||
LIT | −0.006 ** | GROWTH | 0.002 |
(−1.996) | (1.045) | ||
BDSIZE | 0.002 *** | LOSS | 0.007 *** |
(8.717) | (3.152) | ||
INDEP | 0.074 *** | MTB | 0.003 *** |
(18.739) | (15.403) | ||
OUTDIR | 0.136 *** | QUICK | 0.018 *** |
(31.021) | (42.313) | ||
RETEQ | −0.002 *** | ||
(−4.163) | |||
LIT | 0.024 *** | ||
(8.087) | |||
AGE | −0.000 *** | ||
(−4.551) | |||
FEMLAB | 0.059 *** | ||
(8.369) | |||
Fixed Effects | Included | Fixed Effects | Included |
Adj.R2 | 0.28 | Adj.R2 | 0.33 |
N | 20526 | N | 20526 |
F-stat | 92.839 | F-stat | 112.083 |
Tests | WLS | CRISIS | NON CRISIS | ASDI | CCH2 | BLAU |
---|---|---|---|---|---|---|
Variable/Stats | (1) | (2) | (3) | (4) | (5) | (6) |
Intercept | 0.190 *** | 0.252 *** | 0.136 *** | 0.162 *** | 0.257 *** | 0.147 *** |
(14.325) | (7.124) | (9.226) | (11.748) | (10.707) | (10.703) | |
DIVBOD | −0.072 *** | 0.059 | −0.083 *** | −0.122 *** | −0.105 *** | |
(−8.703) | (1.576) | (−9.319) | (−11.334) | (−7.034) | ||
DINVPRO | −0.008 *** | 0.013 ** | −0.010 *** | −0.015 *** | −0.007 *** | |
(−4.025) | (2.522) | (−4.207) | (−4.026) | (−3.239) | ||
DINVPRO*DIVBOD | 0.043 *** | −0.034 | 0.042 *** | 0.070 *** | ||
(3.834) | (−0.806) | (3.395) | (3.468) | |||
BLAU | −0.056 *** | |||||
(−8.836) | ||||||
DINVPRO*BLAU | 0.025 *** | |||||
(2.930) | ||||||
DASDI | −0.027 *** | |||||
(−11.578) | ||||||
DASDI*DIVBOD | 0.114 *** | |||||
(8.730) | ||||||
SIZE | −0.006 *** | −0.008 *** | −0.005 *** | −0.007 *** | −0.011 *** | −0.006 *** |
(−10.680) | (−5.536) | (−9.426) | (−12.336) | (−11.625) | (−10.395) | |
LEV | −0.078 *** | −0.083 *** | −0.079 *** | −0.077 *** | −0.119 *** | −0.079 *** |
(−18.368) | (−7.367) | (−16.913) | (−17.949) | (−15.814) | (−18.399) | |
GROWTH | 0.008 *** | 0.010 * | 0.007 *** | 0.009 *** | 0.015 *** | 0.008 *** |
(3.582) | (1.805) | (3.094) | (4.177) | (4.048) | (3.489) | |
LOSS | 0.008 *** | −0.002 | 0.010 *** | 0.009 *** | 0.018 *** | 0.009 *** |
(3.980) | (−0.312) | (4.162) | (4.304) | (4.769) | (4.197) | |
MTB | 0.002 *** | 0.002 *** | 0.002 *** | 0.002 *** | 0.004 *** | 0.002 *** |
(12.818) | (3.551) | (12.485) | (13.667) | (12.820) | (13.152) | |
QUICK | 0.019 *** | 0.014 *** | 0.020 *** | 0.019 *** | 0.034 *** | 0.019 *** |
(46.676) | (12.030) | (44.456) | (46.369) | (46.342) | (46.468) | |
RETEQ | −0.003 *** | −0.002 | −0.003 *** | −0.003 *** | −0.006 *** | −0.003 *** |
(−5.555) | (−1.078) | (−5.080) | (−5.111) | (−6.560) | (−5.504) | |
LIT | 0.022 *** | 0.019 *** | 0.022 *** | 0.024 *** | 0.029 *** | 0.022 *** |
(7.598) | (2.632) | (7.015) | (8.239) | (5.764) | (7.608) | |
AGE | −0.000 | −0.000 ** | −0.000 | −0.000 *** | −0.000 | −0.000 |
(−0.466) | (−1.976) | (−0.175) | (−3.423) | (−1.319) | (−0.736) | |
FEMLAB | 0.028 *** | −0.036 ** | 0.038 *** | 0.059 *** | 0.024 * | 0.032 *** |
(4.258) | (−2.020) | (4.946) | (7.683) | (1.943) | (4.610) | |
GOVDEBT | 0.190 *** | 0.252 *** | 0.136 *** | 0.162 *** | 0.257 *** | 0.147 *** |
(14.325) | (7.124) | (9.226) | (11.748) | (10.707) | (10.703) | |
Fixed Effects | Included | Included | Included | Included | Included | Included |
Adj.R2 | 0.31 | 0.26 | 0.32 | 0.32 | 0.29 | 0.31 |
N | 20750 | 3118 | 17632 | 20659 | 20750 | 20750 |
F-stat | 233.803 | 15.261 | 97.559 | 109.413 | 95.119 | 107.828 |
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Wan Ismail, W.A.; Kamarudin, K.A.; Gupta, N.; Harymawan, I. Gender Diversity in the Boardroom and Corporate Cash Holdings: The Moderating Effect of Investor Protection. Risks 2022, 10, 60. https://doi.org/10.3390/risks10030060
Wan Ismail WA, Kamarudin KA, Gupta N, Harymawan I. Gender Diversity in the Boardroom and Corporate Cash Holdings: The Moderating Effect of Investor Protection. Risks. 2022; 10(3):60. https://doi.org/10.3390/risks10030060
Chicago/Turabian StyleWan Ismail, Wan Adibah, Khairul Anuar Kamarudin, Namrata Gupta, and Iman Harymawan. 2022. "Gender Diversity in the Boardroom and Corporate Cash Holdings: The Moderating Effect of Investor Protection" Risks 10, no. 3: 60. https://doi.org/10.3390/risks10030060