Global board diversity and debt cost

Purpose This study aims to investigate the impact of board diversity (including directors’ age, gender, educational background, tenure and nationality) on the cost of debt within a concentrated ownership environment. Design/methodology/approach This sample consists of 107 non-financial firms listed in Spain, drawn from the OSIRIS database (Bureau Van Dijk), covering the period from 2014 to 2022, and, to enhance the robustness of the results obtained, the study uses several econometric models. Findings The findings reveal that global board diversity is associated with higher financing costs. This suggests that in such settings, creditors view diversity as a potential source of uncertainty and inefficiency in corporate governance. However, the relationship between global dimensional diversity and debt costs turns negative when a bank is the controlling shareholder. This implies that bank control alleviates information asymmetry, enhances financial discipline and reduces creditor concerns regarding board composition. Originality/value The findings emphasise the importance of considering ownership structure when evaluating the financial implications of board diversity, as its effect on debt costs is contingent upon the incentives and governance role of the dominant shareholder.