Capital Structure and Gender Diversity: Drivers of Economic Resilience in European Firms

Abstract

This study examines the influence of capital structure and gender diversity on a firm's financial performance across over 1,000 financial institutions in 41 European countries from 2000 to 2022. Using fixed effects regression models in a panel data framework, this study assesses the critical metrics of capital structure, including capital ratios, firm size, leverage, and debt-to-equity ratio, against the backdrop of significant economic events such as the Eurozone debt crisis and the COVID-19 pandemic. The findings of this study revealed that capital ratios and firm size have a significant and positive impact on financial performance, while leverage has a significant negative influence. Furthermore, the gender diversity of the board does not significantly influence the financial performance in this dataset. The results contribute to the ongoing debate on corporate governance and financial stability by providing empirical evidence to inform policymakers and executives' decisions. Further investigations should examine sector-specific elements and governance methodologies to enhance our comprehension of the dynamics of financial performance across various economic contexts.