Do female directors mitigate asymmetric cost behavior? Evidence from international data

Abstract

Using an international sample of firms across 37 countries from 1999 to 2018, we find that firms with more gender diversity exhibit lower cost stickiness. The results are robust for alternative measures of variables and after addressing endogeneity issues through a two-stage least squares estimation. Furthermore, the impact of board gender diversity on firm cost stickiness is more pronounced in firms that have higher agency costs, lower corporate governance, higher risk-taking, and non-overconfident managers. Overall, our findings contribute to the extant literature by offering evidence of the role female directors play in minimizing agency problems and reducing asymmetric cost behavior.