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Female directors and agency costs: evidence from Chinese listed firms

Qurat Ul Ain (School of Economics and Finance, Xi'an Jiaotong University, Xi'an, China)
Xianghui Yuan (School of Economics and Finance, Xi'an Jiaotong University, Xi'an, China)
Hafiz Mustansar Javaid (School of Economics, Sapienza University of Rome, Rome, Italy)
Muhammad Usman (School of Accounting, Nanjing Audit University, Nanjing, China)
Muhammad Haris (School of Finance and Economics, Jiangsu University, Zhenjiang, China)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 29 July 2020

Issue publication date: 14 October 2021




The purpose of this research is to examine whether board gender diversity reduces the agency costs of firms in the context of Chinese listed firms.


This paper uses a large sample of 23,340 firm-year observations of Chinese listed companies during 2004–2017. The authors use ordinary least squares regressions as the primary methodology with a wide range of methods to control for endogeneity and to check robustness, including the fixed-effect method, instrumental variable approach, lagged gender diversity measures, propensity score matching, Blau index, Shannon index and industry-adjusted measures of agency costs.


The evidence reveals that the participation of female directors in corporate board reduces agency costs, which correlates with conflicts of interest. Moreover, gender-diverse boards are more effective in state-owned enterprises (SOEs), in which agency issues are more severe. Female directors also provide better monitoring roles in more-developed areas. Finally, corporate boards that have a critical mass of female directors have a greater tendency to reduce agency costs as compared to their token participation. Overall, all findings support the validity of agency theory.

Practical implications

This study shows the economic benefit of female directors in the boardroom by reducing agency costs and by improving firms' governance structure. Regarding the government, which is gradually introducing board gender diversity policies, this study provides valuable pragmatic information for Chinese regulators on this issue.


This study extends the literature by providing evidence that gender diversity in boardroom matters for shareholders' wealth maximization. It provides novel evidence that a critical mass of female directors is more effective in reducing agency costs compared to a single female on the board, and that the effect of gender diversity varies in relation to ownership structure and region.



We are grateful to the Editor-in-Chief, and anonymous reviewers for their constructive comments and suggestions, which have helped to improve this paper.Conflict of interest: All authors declare that they have no conflict of interest.


Ain, Q.U., Yuan, X., Javaid, H.M., Usman, M. and Haris, M. (2021), "Female directors and agency costs: evidence from Chinese listed firms", International Journal of Emerging Markets, Vol. 16 No. 8, pp. 1604-1633.



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