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The Economic Consequences of a 'Glass-Ceiling': Women on Corporate Boards and Firm Value

AFA 2016 San Francisco Meetings Paper

51 Pages Posted: 25 Oct 2013 Last revised: 24 Sep 2017

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics

Daniel Urban

Technical University of Munich

Date Written: September 23, 2017

Abstract

We analyze capital market reactions to exogenous departures of female board members due to death and illness. Theoretically, the "glass-ceiling" effect implies that a more rigorous selection of female board members leads to superior qualifications of women on corporate boards. In line with this view, we find in long and short-run event studies that the capital market responds more negatively to exogenous departures of women. This effect is more pronounced in countries where the selection of women is more rigorous and fewer women serve on boards. Thus, the "glass-ceiling" effect leads to an over-performance of the (few) women who make it to the top. This implies that gender-unequal selection processes of board members lead to sub-optimal outcomes for firms.

Keywords: Female board representation, exogenous retirements, gender quota, firm value, glass ceiling

JEL Classification: G32, G34

Suggested Citation

Schmid, Thomas and Urban, Daniel, The Economic Consequences of a 'Glass-Ceiling': Women on Corporate Boards and Firm Value (September 23, 2017). AFA 2016 San Francisco Meetings Paper. Available at SSRN: https://ssrn.com/abstract=2344786 or http://dx.doi.org/10.2139/ssrn.2344786

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Daniel Urban (Contact Author)

Technical University of Munich ( email )

Arcisstrasse 21
Munich, 80333
Germany

HOME PAGE: http://www.danielurban.org

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