Investor reaction to women directors

Abstract

Existing studies on women directorships present equivocal results on the association between appointing women directors and firm performance. These studies tend to focus on western countries and largely ignore investors' reactions to such appointments. This paper applies the financial event study method and finds that investors generally respond positively to the appointment of women directors in Singaporean firms. Regression analyses also reveal that investors are most receptive when the women are independent directors and are least receptive when the directors assume the CEO role. This study not only tests the theory of gender diversity in an Asian context but also examines whether investors react systematically to the different positions that women directors hold on corporate boards, a question that has received little attention in prior studies.

The effect of gender on stock price reaction to the appointment of directors: the case of the FTSE 100

“…As in the case of Farrell and Hersch, one can criticise these results on the basis that the authors failed to analyse the male section of their sample. Looking at the Singapore stock exchange, Kang, Ding and Charoenwong (2010) find that the market is least receptive towards the appointment of a female CEO, more receptive to the appointment of a female Executive Director, and most receptive to the appointment of a female independent Non-Executive Director. The authors take this as indication that, due to gender stereotyping, female Non-Executive Directors are acceptable to the market, while female CEOs are not.…”

The Market Reaction to the Appointment of Women on Corporate Boards: Evidence from the Italian Listed Companies

“…To apply the market model, an estimation window was preliminarily defined: according to Ku Ismail and Manaf (2016) and Kang et al (2010), the expected returns E(R i,t ) are estimated in an estimation windows covering days −200 to −11. The appointment day of women directors is fixed to day 0. expected return E(R i,t ) over an event window:…”

“…companies operational and financial performance (ROA, ROE, ROI, ROS, Tobin's Q), an under-explored field is the stock markets' reactions to women's appointments to the boards (Bonnier & Bruner, 1988;Charitou, Patis, & Vlittis, 2010;Dobbin & Jung, 2011;Dunn, 2012;Fredericks, 2014;Ku Ismail & Manaf, 2016). To our knowledge, positive abnormal returns have been scored following the appointment of women directors in Singapore (Kang, Din, & Charoenwong, 2010;Ding & Charoenwong, 2013) and in Spain (Campbell & Mínguez-Vera, 2010).…”

The Performance Effects of Gender Diversity on Bank Boards

“…First, our findings help to reconcile the mixed evidence obtained to date. Generally, the results on the impact of gender diversity on firm performance run the gamut, from those that find a positive impact on performance (Gul et al, 2011;Campbell and Minguez-Vera, 2008;Noland et al, 2016;Kang et al, 2009;Schmid and Urban, 2016) to those that find a negative impact (Ahern and Dittmar, 2012;Adams and Ferreira, 2009), to those that find little or no impact (Farrell and Hersch, 2004;Ferrari et al, 2016). While some previous papers documented evidence of non-linearities regarding some performance measures (de Andres and Vallelado, 2008), our study is first in providing comprehensive evidence that the impact of board gender diversity on performance depends on how much diversity the board has already achieved and on how well-managed the institution is overall.…”