Skip to main content

LUP Student Papers

LUND UNIVERSITY LIBRARIES

The Impact of Board Gender Diversity on Cost of Capital - Investigation of the Swedish Market

Eneroth, Carl LU and Fehrlund Persson, Alexander LU (2024) BUSN79 20241
Department of Business Administration
Abstract
This thesis aims to investigate if there is an existing relationship between board gender diversity and cost of capital for public firms in Sweden. The study has a quantitative approach and is based on 1306 public Swedish companies during the time period 2019-2023. The study found that more women on the board is negatively associated with cost of capital, which indicates that more diverse boards can add value to firms due to higher efficiency. WACC, this study’s main dependent variable, is based on cost of equity and cost of debt. The estimation of cost of debt has a significant negative relationship with the share of women on the board which indicates that more women on the board tend to be related to better lending conditions and lower... (More)
This thesis aims to investigate if there is an existing relationship between board gender diversity and cost of capital for public firms in Sweden. The study has a quantitative approach and is based on 1306 public Swedish companies during the time period 2019-2023. The study found that more women on the board is negatively associated with cost of capital, which indicates that more diverse boards can add value to firms due to higher efficiency. WACC, this study’s main dependent variable, is based on cost of equity and cost of debt. The estimation of cost of debt has a significant negative relationship with the share of women on the board which indicates that more women on the board tend to be related to better lending conditions and lower interest rates. On the other hand, the study found no significance between cost of equity and the share of women in Swedish boards. This could be explained by the difficulties of measuring cost of equity, especially on firm levels. Overall the results of the study indicate that a greater share of women on corporate boards contribute to lower cost of capital. (Less)
Please use this url to cite or link to this publication:
author
Eneroth, Carl LU and Fehrlund Persson, Alexander LU
supervisor
organization
course
BUSN79 20241
year
type
H1 - Master's Degree (One Year)
subject
keywords
Cost of capital, Cost of equity, Cost of debt, Board gender diversity, Gender behavior
language
English
additional info
Purpose: The purpose of the study is to examine if a greater share of women in Swedish public boards has a significant effect on cost of capital as well as cost of equity and cost of debt separately.

Methodology: This study examines the relationship between board gender diversity and cost of capital using a panel regression approach with fixed effects. Control variables and robustness tests have been included in the regression model to ensure the reliability of the results.

Theoretical perspectives: The theories included in the study are agency theory, tradeoff theory, stakeholder theory and signaling theory, which is evaluated in line with previous research of board gender diversity and cost of capital.

Empirical foundation: The data used in the thesis has been collected from Refinitiv Eikon and is based on 1306 Swedish public companies during the time period 2019-2023.

Conclusion: The findings indicate that, for Swedish non-financial publicly traded companies, having a higher number of female directors on the board results in lower cost of capital.
id
9167560
date added to LUP
2024-08-07 16:06:00
date last changed
2024-08-07 16:06:00
@misc{9167560,
  abstract     = {{This thesis aims to investigate if there is an existing relationship between board gender diversity and cost of capital for public firms in Sweden. The study has a quantitative approach and is based on 1306 public Swedish companies during the time period 2019-2023. The study found that more women on the board is negatively associated with cost of capital, which indicates that more diverse boards can add value to firms due to higher efficiency. WACC, this study’s main dependent variable, is based on cost of equity and cost of debt. The estimation of cost of debt has a significant negative relationship with the share of women on the board which indicates that more women on the board tend to be related to better lending conditions and lower interest rates. On the other hand, the study found no significance between cost of equity and the share of women in Swedish boards. This could be explained by the difficulties of measuring cost of equity, especially on firm levels. Overall the results of the study indicate that a greater share of women on corporate boards contribute to lower cost of capital.}},
  author       = {{Eneroth, Carl and Fehrlund Persson, Alexander}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Impact of Board Gender Diversity on Cost of Capital - Investigation of the Swedish Market}},
  year         = {{2024}},
}