Thomas Loy

Board Gender Diversity and its Effects on Capital Markets : New International Evidence

We analyze investors’ perception and long-term effects of board gender diversity on firms’ capital market performance in an international setting. Our results, controlling for the endogenous nature of board appointments, indicate that female board representation neither improves nor reduces firms’ long-term stock performance. Thus, investors seem to perceive female and male board members as being equivalent in the long term and, on average, do not base their investment decisions on directors’ gender. Hence, we argue that it is imperative to go beyond the conventional thinking in terms of the business case for gender diversity and broaden the perspective also in order to incorporate societal and ethical aspects in the strive to board gender equality. Even more so, as our results show that it does not entail reduced shareholder value, which the literature on mandatory gender quotas commonly seems to suggest.

What Happens if Private Accounting Information Becomes Public? The Case of Access to Bank Debt

We examine the effect of private accounting information becoming public on small firms’ access to bank debt. Both proprietary cost of disclosure and relationship banking have contributed to German private firms’ traditional non-disclosure of financial statements. We employ a regulatory change, which increased enforcement and established severe fines for firms that do not publicly disclose financial statements, as a quasi-natural experiment. We find that small firms’ access to bank debt has significantly increased after the disclosure shock. With our study based on a novel dataset in a non-voluntary private firm setting, we contribute to the discussion on private and public information in debt contracting.

Institutional Correlates with Female Board Representation: A Research Note

Gender equality on boards is a global and highly politicized issue. To this day, there is considerable cross-country variation in female board representation. We examine institutional supply- and demand-side factors associated with this issue. Our results indicate that a societal climate of gender equality contributes to more women on boards, mainly through fostering the supply of suitable candidates. Therefore, the glass ceiling should be improved through a societal supply-side effort which needs to complement demand-side (quota) regulation.

The Financial Burden of Regulation – Exploring Macroeconomic and Institutional Ties with the Demand for Accounting Services

We empirically analyze the determinants of regulatory costs associated with accounting, audit and tax rules in the European Union. Regulatory costs include transfer payments from losers to beneficiaries of such legislation. Hence, building upon a novel dataset, we estimate regulatory costs as the actual revenues earned from accounting, audit and tax advisory services. Potential determinants include governance mechanisms, financing sources as well as country-specific tax and audit requirements. Our results indicate that regulatory cost strongly depend on the economy’s size. However, their share of GDP decreases in larger economies. We find further evidence that large companies bear the majority of regulatory costs. Strong governance and enforcement institutions cannot fully compensate this effect. Competitive income tax systems do not lower regulatory costs, indicating tax advisory as the “price tag” of maximizing tax benefits.