Women Leadership Index and Corporate Cash Holdings: The Serial Mediation Role of ESG Assurance and ESG Performance

ABSTRACT

Corporate cash holding policies have become increasingly important as firms face heightened global uncertainty, growing sustainability demands, and greater transparency expectations. This study examines the effect of the Women Leadership Index (WLI) on corporate cash holdings through ESG assurance and ESG performance within a serial mediation framework. The analysis is based on 12,330 firm‐year observations from non‐financial companies across Asia‐Pacific and Europe. Empirically, the study employs a serial mediation approach using System GMM and Hayes' PROCESS Model 6, complemented by robustness tests and additional analyses. The findings reveal that WLI has a positive and significant effect on corporate cash holdings, suggesting that firms with higher‐quality female board representation tend to retain more cash as a strategic response to governance discipline and sustainability demands. Furthermore, this relationship operates through a serial mediation mechanism. WLI enhances ESG assurance as a monitoring function, strengthening transparency and credibility and, in turn, promoting higher ESG performance. Improved ESG performance subsequently increases long‐term investment needs and exposure to uncertainty, leading firms to hold more cash as a strategic buffer. These results indicate that high‐quality female leadership not only mitigates cash inefficiencies but also aligns cash holding policies with firms' strategic needs. From a practical perspective, regulators, firms, and investors should expand women's access to leadership development and promote higher‐quality ESG assurance as a governance instrument to enhance transparency and sustainability risk management. This study contributes to the literature by uncovering the mechanisms through which women's leadership influences corporate cash holding policies, integrating ESG assurance and performance. This area remains relatively underexplored in prior research.