Abstract
The scope of this study is to examine the impact of board gender diversity on corporate cash-holding decisions within the European sport and leisure sector. A sample of 125 unique firms was selected for the period from 2008 to 2019, and analysis was performed using panel fixed-effects regressions. Empirical evidence documented that the higher the number of women serving on the board of directors, the higher the level of cash the firm holds. This result is attributed to the critical mass theory of governance, suggesting that boards having at least two women directors are associated with higher cash holdings compared to firms with one or no women directors. Additionally, gender diversity leads to increased cash holdings for firms with lower governance quality, suggesting that women on boards perform a monitoring role within those firms with the most severe agency problems. The results remain robust after several sensitivity tests controlling for potential endogeneity among the variables and the model’s functional form.
Highlights
Gender diversity within the board of directors is a topic that has received significant attention from the business world, regulators, and academic researchers within several academic fields, including human resource management, leadership, economics, and even accounting and finance (Loukil and Yousfi 2016; Adams and Ferreira 2004; Carter et al 2003; Daily et al 1999, among others)
The scope of this study is to extend the broader understanding of governance and financial decision making within the sport and leisure sector by examining the impact of board gender diversity on corporate cash-holding decisions and test whether a critical mass of women on the board of directors impacts the liquidity of firms within the sport and leisure sector
Board gender diversity has an average of 2.44, indicating that, on average, two (2) women serve on the sample firms’ boards, with a minimum value of zero and a maximum value of nine women on the board. This number is higher compared to that in the study by Atif et al (2019) on a sample of S&P 1500 firms, which was 1.29, indicating that European firms exercise board gender diversity to a higher extent compared to US firms
Summary
Gender diversity within the board of directors is a topic that has received significant attention from the business world, regulators, and academic researchers within several academic fields, including human resource management, leadership, economics, and even accounting and finance (Loukil and Yousfi 2016; Adams and Ferreira 2004; Carter et al 2003; Daily et al 1999, among others). According to Laine and Vehmas (2017), the sports economy in Europe has evolved into a significant retail and wholesale business with a crucial contribution to consumption, adding significantly to employment and economic value within the European economy. The scope of this study is to extend the broader understanding of governance and financial decision making within the sport and leisure sector by examining the impact of board gender diversity on corporate cash-holding decisions and test whether a critical mass of women on the board of directors impacts the liquidity of firms within the sport and leisure sector. The study considers the issue of board gender diversity for cash-holding decisions within sports, a sector characterized by material growth, with a significant underrepresentation of women on the management teams
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