Are Women Underpriced? Board Gender Diversity and IPO Performance
60 Pages Posted: 12 Feb 2021 Last revised: 16 Mar 2021
Date Written: February 26, 2021
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: Suggested Citation