A new study by our researcher Josep Maria Argilés-Bosch, alongside with Josep Garcia-Blandon (IQS School of Management) and Diego Ravenda (TBS Business School) investigates the impact of female board directors on firms’ cost of debt, using unique research setting in Norway. While prior studies suggest that female directors contribute to lower financing costs due to their risk-averse decision-making, this study finds no significant relationship between increased female board representation and firms’ borrowing costs.

The research leverages Norway’s 2006 board gender quota, which mandated a minimum of 40% female representation in publicly listed companies. By implementing a difference-in-differences approach, the study compares Norwegian firms affected by the quota with similar firms in neighboring Scandinavian countries that were not subject to such regulation. Contrary to previous findings, the results indicate that a substantial increase in female directors did not lead to any measurable reduction in firms’ cost of debt.

This challenges the prevailing assumption that gender-diverse boards inherently improve corporate financial outcomes. The study suggests that factors such as legal frameworks, market structures, and prior gender equality levels may play a more critical role in shaping corporate governance dynamics than gender composition alone.

These findings have important implications for policymakers and investors, questioning whether board gender quotas should be justified on financial grounds. Instead, the study reinforces the argument that gender diversity should be pursued as a matter of equity and inclusion rather than for assumed financial advantages.

Discover more about the UB Business School’s research! Explore the full list of our researchers and their latest research here.