Boards’ Gender Diversity and Information Asymmetry in Stock Market of Pakistan

Abstract

Prior evidence suggests that the presence of women on director boards increases the quantity and quality of public disclosure by firms. To explore this on Pakistan, we examined gender diversity in the corporate board and its relationship with information asymmetry in the stock market of Pakistan. We model information asymmetry as a function of gender diversity proxies and control variables using data for the period 2010–2019, collected from financial reports and investing.com. Thirty companies were selected from major sectors – Chemical, Commercial Bank, Cement, Fertilizer, Textile, Oil and Gas, Power Generation and Distribution, and Technology and Communication. The panel GMM approach was used for estimation. The result indicates that gender diversity on board of corporate has an insignificant relationship with the level of information asymmetry in the stock market of Pakistan whereas in control variables, institution ownership, size, and volatility have a significant relationship with information asymmetry. The findings can help shareholders, investors, and other firms’ stakeholders to who may perceive that female presence on boards can lead to their interests being better safeguarded. It can also help policymakers in reducing information asymmetry in the stock market by improving corporate governance in Pakistan.

Keywords: Corporate Governance, Stock Markets, Gender Diversity, Information Asymmetry and Female Director, Pakistan