Securities litigation risk and board gender diversity

Abstract We investigate the effect of board gender diversity on the risk of securities litigation. We find that this risk is inversely related to the fraction of female independent directors on a firm's board. Additionally, the effectiveness of these directors in reducing securities litigation risk is negatively related to the firm's monitoring costs and positively related to its complexity. We further investigate the channels through which female independent directors may reduce the risk of securities litigation and attribute the reduction to improvements in conditional accounting conservatism and corporate social responsibility policy.