This chapter examines the effect of board gender diversity on corporate debt maturity It analyses a gender-based behavioral dimension for corporate debt maturity choice. The study finds that firms with a larger female representation on the board of directors and managers tend to have a larger proportion of short-maturity debt. The evidence also shows that when a woman holds the position of chair of the board and simultaneously is a shareholder, the chance for issuing a short-term debt is higher. These findings meet the argument that boards with female directors and leaders are more likely to issue short-term debt. This method of financing decision can be considered as a corporate governance device with potential impact on reducing managerial opportunism.
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Over time there has been a differentiation between genders, overvaluing the male sex over the female and creating a different social role depending on gender. Nevertheless, in the last century there has been significant legislative contributions to gender equality in the labor field, with the European union's policies providing conditions for promoting the right to gender equality. In addition, in recent decades there has been an improvement in the educational level of women and an increase in their participation in the labor market, occupying leadership positions, which have traditionally been controlled by men. These factors have contributed to the interest of research on different issues regarding gender on corporate board of directors.
The topic of female representation in the corporate board of directors has gained relevance since the beginning of this century, giving rise to research and implementation of regulations that provide minimum quotas for the under-represented gender. Kirsch (2018) refers in his literature review, focused on large, listed companies, that in the period of 2015, only 21% of directors were female in the European Union, 20% in the United States and 3% in Japan. According to Informa D&B (2022), female represented 28.3% of directors in the Portuguese companies in 2021.
Several behavioral finance studies have focused their attention on how the characteristics of corporate managers influence business decisions. Following this theoretical approach, a growing body of research provides evidence of differences in women's behavior compared to men's: they are more prudent (Huang & Kisgen, 2013), more conservative in their predictions (Lonkani, 2019), their participation makes boards more influential in management (Fondas & Sassalos, 2000) and have greater risk aversion and ethical sense (Ho, Li, Tam, & Zang, 2015). Also, in line with these findings, recent literature on the board gender diversity suggests that differences in women behavior, compared to men can influence financial decisions (e.g., Huang & Kisgen, 2013; Hérnandez-Nicolás, Martin-Ugedo, & Mínguez-Vera, 2015). However, there is scarce and controversial evidence of the role of female directors in this field (Garcia & Herrero, 2021).
Several empirical studies show that boards with a higher percentage of women directors are associated with lower debts levels (e.g., Alves, Couto & Francisco, 2015; Hernández-Nicolás et al., 2015), following the arguments of agency theory, that greater board diversity leads to a reduction in information asymmetries. This circumstance improves firm’s proportion of external equity in the capital structure, leading to lower leverage. Based on the theories of gender differences which suggest that female directors are less overconfidence and have greater risk aversion then male directors, López-Delgado and Diéguez-Soto (2020), Fenoy-Castaño, Martínez-Romero and Martínez-Alonso (2021) also found a negative relation between gender diversity and leverage. La Rocca, Neha and La Rocca (2020) argue that female managers, being less overconfident and more conservative, in line with their personal traits (higher risk aversion and more ethical constraints), prefer to preserve financial flexibility to avoid missing any growth opportunities, and choose to have less debt in the capital structure.