The relationship between female workforce participation and corporate bond credit ratings

Abstract

The topic of gender diversity in the workforce has received an increasing amount of attention and even resulted in developing a new term, sheconomy, which describes an economy in which women are the main economic players. This study examines the relationship between female workforce participation and corporate bond credit ratings. Using an ordered logit regression model and a sample of listed companies on the Korea Exchange, the results show that the higher the number and proportion of women in the workforce (based on female directors and female employees), the higher the credit rating. However, for chaebol companies, where female directors’ positive role is limited by chaebol owners, a negative (–) moderating effect is observed in the relationship between female workforce participation and credit ratings. Besides, female directors who are members of the owner’s family and were appointed as a means of succession negatively affect a company’s value. The findings contribute to accounting and finance research on the relationship between governance and credit ratings in terms of gender diversity. Policy implications regarding the recent system changes in Korea, including introducing a gender quota system, can be derived from the study.