Are Women Underpriced? Board Gender Diversity and IPO Performance

60 Pages Posted: 12 Feb 2021 Last revised: 16 Mar 2021

See all articles by P. Raghavendra Rau

P. Raghavendra Rau

University of Cambridge

Jason Sandvik

A.B. Freeman School of Business

Theo Vermaelen

INSEAD - Finance

Multiple version iconThere are 2 versions of this paper

Date Written: February 26, 2021

Abstract

Over the last decade, practitioners have used economic arguments to claim that board gender diversity has a positive impact on firm value. If we focus on the initial returns to U.S. firms going public over this period with bulge bracket investment bank advisors, we find evidence that investors value diversity, but this does not translate into an effect on valuation beyond the issue date. There is no difference in economic fundamentals such as higher profitability or abnormal stock market performance of firms with gender-diverse boards following the IPO. The underpricing appears to reflect recent institutional investor demand for diverse firm boards during the IPO process, possibly as a result of social pressure, an increased focus on corporate social responsibility, and the improved qualifications and experience of female board members over this period.

Keywords: Initial Public Offerings, Going Public Process, Gender Diversity, Underpricing, Investment Banks

JEL Classification: G24, G30, J16

Suggested Citation

Rau, P. Raghavendra and Sandvik, Jason and Vermaelen, Theo, Are Women Underpriced? Board Gender Diversity and IPO Performance (February 26, 2021). INSEAD Working Paper No. 2021/05/FIN, Available at SSRN: https://ssrn.com/abstract=3783771 or http://dx.doi.org/10.2139/ssrn.3783771

P. Raghavendra Rau

University of Cambridge ( email )

Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)

HOME PAGE: http://www.raghurau.com/

Jason Sandvik

A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

Theo Vermaelen (Contact Author)

INSEAD - Finance ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France
33 1 60 72 42 63 (Phone)
33 1 60 72 40 45 (Fax)

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