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Cost of equity, debt financing policy, and the role of female directors

Lookup NU author(s): Dr Vu TrinhORCiD



This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).


We examine the role of female directors on firm cost of equity in the context of US-listed firms, and further explore the mediating impact of debt financing policy on such association. Using a dataset of 4619 non-financial firm-year observations covering the period of 2008–2019, we find that firms with female directors on boards are likely to exhibit a lower cost of equity, through relying on a less risky financing decision. The indirect effect is found to take up around 45% of the female-cost of equity association. In addition, our analysis also indicates that the lower debt financing levels are realised only if female representation reaches a critical mass of around 28%. Our findings provide important implications for firms in balancing the gender ratio within their boards to level out their risk-taking through their financing decisions.

Publication metadata

Author(s): Aljughaiman A, Albarrak M, Cao DN, Trinh VQ

Publication type: Article

Publication status: Published

Journal: Cogent Economics and Finance

Year: 2022

Volume: 10

Issue: 1

Online publication date: 21/08/2022

Acceptance date: 30/07/2022

Date deposited: 27/08/2022

ISSN (electronic): 2332-2039

Publisher: Taylor and Francis


DOI: 10.1080/23322039.2022.2109274


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Funder referenceFunder name
supported by the Deanship of Scientific Research, King Faisal University [207013].