Gender Diversity in the Boardroom on Private Equity Placements : Evidence from China

We address two main questions: (1) Do firms with greater gender diversity on their boards benefit from a reduction in the cost of private equity placements (PEPs)? That is, do they benefit from a reduction in wealth effects? (2) Do firms with greater gender diversity on their boards enjoy higher proceeds for PEPs? Moreover, we also investigate the moderating effects of PEP regulation change on relationship of board gender diversity and private equity placements (PEPs). Greater board gender diversity reduces the cost of PE offers and increases the proceeds from PEPs. Hence, firms with a gender diversified boardroom help to reduce the loss of wealth of the non-participating shareholders. In addition, independent female directors appear to be more beneficial to PE issuing firms than female executive directors, which supports the information asymmetry story and agency theory. However, regulation change was even helpful to decrease cost of PEPs in firms with male only board of directors. Institutional theory explains how normative behavior patterns are maintained or changed between organizations and their environments at industry and societal levels in this study. Upper echelons-UET, the resource dependence, organizational and Social capital theories explore how gender diversity of board room help for PEPs. This study explores for more theoretical perspectives on women on boards by analyzing the tensions between institutional theory and other different theoretical perspectives of gender diversity. From a practical perspective, our study suggests that greater gender diversity at the corporate board level produces positive financial and governance outcomes. Findings of this study also provide positive implications for improving gender fairness on the job market in China