Board Gender Diversity and its Effects on Capital Markets: New International Evidence

Abstract

We analyze investors’ perception and long-term effects of board gender diversity on firms’ capital market performance in an international setting. Our results, controlling for the endogenous nature of board appointments, indicate that female board representation neither improves nor reduces firms’ long-term stock performance. Thus, investors seem to perceive female and male board members as being equivalent in the long term and, on average, do not base their investment decisions on directors’ gender. Hence, we argue that it is imperative to go beyond the conventional thinking in terms of the business case for gender diversity and broaden the perspective also in order to incorporate societal and ethical aspects in the strive to board gender equality. Even more so, as our results show that it does not entail reduced shareholder value, which the literature on mandatory gender quotas commonly seems to suggest.

Keywords: Corporate Governance, Board of Directors, Gender Diversity, Shareholder Value

JEL Classification: G11, G30, G34, J16