Board gender diversity and firm solvency: Evidence from Scandinavia

The implementation of a board gender quota in Norway in 2006 resulted in an extraordinary increase in the number of female directors over a short period of time. As a result, previous studies have used this unique scenario to examine the effects of appointing female directors on various corporate outcomes, such as the cost of debt. Extending this line of research, this study explores whether the appointment of female directors to the boardroom has a significant impact on a firm's solvency. The empirical analysis draws on a sample of firms from Denmark, Finland, Norway and Sweden and implements difference-in-differences estimations. The extant evidence is scarce and inconclusive and, more importantly, has been obtained without controlling for endogeneity. Our findings strongly suggest that the solvency of Norwegian firms did not change significantly after the appointment of a large number of female directors. This result is robust to a battery of sensitivity checks.