Gender diversity and cost of equity capital: evidence from an emerging market

Purpose: This study examines the relationship between board gender diversity and the cost of equity among publicly traded Brazilian companies.

Design/methodology/approach: The sample includes Brazilian firms listed on B3 from 2010 to 2023. This study estimated linear and nonlinear regression models using the two-step generalized method of moments (GMM). It measured gender diversity through board composition metrics and diversity indices, while it calculated the cost of equity using the Fama–French five-factor model.

Findings: The results obtained suggest that increased board gender diversity is associated with a lower cost of equity, with a nonlinear effect indicating that progressive diversity improvements yield more significant reductions in capital costs.

Originality/value: This study better provides a comprehension of gender diversity and financial performance in a Latin American emerging market, addressing a gap in research predominantly focused on developed economies. It is the first to use the Fama–French five-factor model to explore this relationship in emerging markets.